Perspectives

‍Why Organizations Need to Expand Their Due Diligence Approach

1. Technology Is the Value Driver, Not Just Support Infrastructure

In many modern acquisitions, technology assets represent the primary value driver rather than merely supporting infrastructure. The difference between a technology stack that can scale, adapt, and create competitive advantage versus one burdened with technical debt and security vulnerabilities can make or break an acquisition's ROI.

The QoT framework helps acquirers understand not just what technology exists, but its quality and readiness to support future business objectives. This shifts the conversation from "what do they have?" to "how well will it serve our combined future?"

2. AI Adoption Creates New Risk Dimensions

As organizations rapidly adopt AI technologies, traditional due diligence frameworks have struggled to keep pace. The QoT framework specifically addresses AI risk across multiple dimensions: secure integration, data governance, employee awareness, usage monitoring, secure development, and vendor management.

This is increasingly critical as target companies may be using AI tools that create previously unconsidered risks around data leakage, intellectual property exposure, or compliance violations.

3. Maturity Assessment Enables Strategic Planning

Unlike frameworks that focus primarily on risk identification, the QoT approach establishes clear maturity levels (from Stage 1 to Stage 5). This allows acquiring organizations to:

• Understand where the target company stands in its technology risk management journey
• Identify specific steps needed to advance capabilities
• Develop realistic post-acquisition technology integration roadmaps
• Set appropriate timelines and budgets for technology improvements

4. Concrete Metrics Drive Objective Assessment

The QoT framework provides specific metrics for each risk category. For example, rather than simply assessing "cybersecurity," it examines metrics like incident numbers, control effectiveness, and response time. This transforms due diligence from a subjective exercise to a measurement-driven process that supports data-based decision making.

5. Employee Factors Are Properly Weighted

While traditional frameworks often focus on systems and processes, the QoT approach recognizes the critical human element in technology risk. By evaluating employee awareness, training programs, and understanding of emerging risks (particularly around AI), it addresses a dimension frequently underweighted in conventional due diligence.

Implementing a QoT Approach in Your Next Transaction

Expanding your due diligence process to incorporate a Quality of Technology framework doesn't require abandoning existing methodologies. Instead, consider these implementation strategies:

1. Complement existing frameworks: Use QoT elements to address gaps in your current approach, particularly around AI risk and maturity assessment.
2. Adopt the maturity model: Implement the 1-5 stage assessment to provide context for risk findings and create clear improvement pathways.
3. Incorporate specific metrics: Use QoT's suggested measurements to enhance objectivity in your assessment process.
4. Balance technical and business perspectives: Use the framework to translate technical risks into business impacts that executives and board members can understand.
5. Create post-acquisition roadmaps: Leverage the maturity assessment to develop realistic plans for technology integration and improvement after the deal closes.

The Bottom Line: From Risk Mitigation to Value Creation

The most compelling reason to adopt a Quality of Technology framework is its ability to transform due diligence from a risk mitigation exercise into a value creation opportunity. By understanding not just what risks exist but how to advance technology capabilities, organizations can:

• Make more informed pricing and negotiation decisions
• Set realistic integration timelines and budgets
• Identify synergies that might otherwise be missed
• Create competitive advantage through technology excellence

In an era where technology increasingly drives business value, organizations that expand their due diligence approach with a Quality of Technology framework gain both deeper insight into acquisition targets and clearer pathways to post-merger success.

As the technology landscape continues to evolve with AI and other emerging innovations, the QoT framework provides a forward-looking approach that helps organizations not just assess where target companies are today, but envision what they could become tomorrow.

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