What is Technology Due Diligence?
Whereas financial and legal due diligence are well accepted stages of the investment process, technology due diligence is a relatively new concept.
There’s some of explanation of it on the Remarkable Innovation technology due diligence pages, but over the next few weeks we’ll post a series of articles here that cover the topic in more detail. The final post in the series will include a collection of links to other writing on the subject.
Fist of all, a brief introduction:
Due diligence has traditionally focused on the past financial performance of a proposition company but, as technology has become more important to the survival of every organisation, a new phase of the due diligence process has become common: technology due diligence (TDD).
“Technology assessment should be integrated with conventional due diligence, providing a new focus for investment opportunities that are primarily technology-based and/or technology-driven…
…This type of paradigm shift is needed to respond to the increasingly frequent appearance of complex technology components in new and evolving enterprises.”
“Technology due diligence: the need for and benefits of technology assessment in connection with investment in high-tech companies”
Carol R. Goforth, Ronald R. Goforth
Rutgers Computer & Technology Law Journal, Summer 2001
Unlike financial due diligence, which is a relatively formulaic process, technology due diligence does not lend itself to “checklists”. The process varies widely depending on the type of technology being examined, and the steps are usually defined on a case-by-case basis by the experts performing the assessment.
Note that the TDD process described in the upcoming posts relates to a company evaluation, but TDD is also frequently applied to large-scale technology purchases, where many of the principal points discussed will still apply.
Next week: “What Does Technology Due Diligence Involve?”