Sell-Side Technology Due Diligence: What a Portfolio Company Should Prepare

To prepare for sell-side technology due diligence, a portfolio company should document what a buyer's technical team will check before that team asks: who owns each system and account, the state of the code and infrastructure, how the reported revenue metrics are produced, and what it would take to integrate or separate the business after closing. Most of this work is collecting and reconciling evidence the company already holds, and the slowest part is usually the data, because every figure in the information memorandum has to trace back to the CRM, the billing system and the ERP. Start early enough that problems can be fixed before the data room opens, so that management presents remediated issues rather than explaining open ones in the first Q&A session.

The six stages below follow the order in which most buyer technical teams work. Each one lists the common problem and a practical way to check for it internally.

Stage 1: Build a system and ownership inventory

The buyer's first request is usually a list of every application the company runs, with the vendor, contract term, renewal date, annual cost and the named person who holds administrator access. This list sets the scope for everything that follows, and a buyer who finds a system missing from it will assume the rest of the list needs checking too.

• What goes wrong: administrator accounts sit with a former employee, a personal email address or an outside agency, and a key contract renews or lapses in the middle of the sale process.
• How to check it: pull vendor payments from the general ledger for the last twelve months, match each payment to an application on the list, and confirm that every admin login belongs to a current employee on a company domain. Flag any contract that expires within the expected deal timeline.

Ownership of code, accounts and data should sit with the company in every vendor relationship. In DevriX engagements the client owns its code, accounts and data, which is the arrangement a buyer expects to find across the whole vendor list.

Stage 2: Document code, infrastructure and security

The technical team will ask for repository access (or a read-only export), an architecture diagram, a description of how code reaches production, the list of third-party and open-source dependencies, and the results of the most recent security test with its remediation status.

• What goes wrong: production environments were configured by hand and only one engineer knows how to rebuild them, dependencies are several major versions behind, or an open-source licence conflicts with how the product is sold.
• How to check it: ask an engineer who did not build the system to stand up a staging environment from the written documentation alone, and record where they got stuck. Run a dependency and licence scan, and collect incident records for the last two years with a short note on what changed after each one.

Infrastructure defined as code (in Terraform or a similar tool) answers several of these questions at once, because the configuration itself is the documentation. DevriX writes infrastructure as code in Terraform for this reason, and a buyer's team can read it the same way.

Stage 3: Reconcile the revenue metrics to source data

This is the stage where sell-side technology diligence and financial diligence overlap, and where most of the follow-up questions come from. The buyer will want ARR, MRR, net revenue retention, churn and pipeline figures, and will want to see how each number is calculated from the systems of record.

• What goes wrong: the board pack is built from spreadsheets that do not tie to the CRM or billing system, sales and finance use different definitions of the same metric, or deals are not tagged by product, so revenue by product line cannot be shown from source.
• How to check it: pick one recent quarter, rebuild ARR from billing records line by line, compare it with the reported figure, and write down every adjustment and the reason for it. Publish a one-page definitions sheet that both the CFO and the head of sales sign.

A buyer gives more weight to numbers produced by a controlled process than to numbers produced by a skilled analyst. DevriX runs its data and reporting work under change control, with versioned, tested pipelines and an audit trail, so that a buyer can see when a metric definition changed and who approved the change.

Stage 4: Show that the go-to-market stack works as described

Buyers increasingly ask for evidence behind the growth story: CRM data quality, how leads are attributed to channels, how accurate past forecasts were, and whether website and marketing tracking records what management says it records.

• What goes wrong: the CRM holds large numbers of duplicate contacts and companies, nobody has measured forecast accuracy, and attribution claims in the management presentation cannot be reproduced from the reporting tools.
• How to check it: compare the forecast submitted at the start of each of the last several quarters with the actual result, and keep the comparison even if it is unflattering. Run a duplicate report and fix what it finds, then trace three or four closed deals from the first form submission or meeting through to the signed contract and invoice.

The aim at this stage is to give the buyer a pipeline and attribution story that holds up when their team rebuilds it from raw exports. DevriX does this kind of RevOps work across Salesforce and HubSpot for portfolio companies preparing for a sale.

Stage 5: Describe how the business would be integrated or separated

A strategic buyer will want to know what folding the company into its own platforms would involve, and a sponsor buying a carve-out will want to know what the unit needs in order to stand on its own. Both questions come down to which systems, data and contracts are shared with something else.

• What goes wrong: the company shares a CRM tenant, an ERP instance or a website domain with a parent or sister business, customer data is mixed with records that will not transfer, and nobody has estimated the cost or time of separation.
• How to check it: write a short note (two or three pages is enough) that lists each system as standalone or shared, names the transitional services that would be needed after closing, and gives a rough cost and timeline for separation or consolidation.

Sellers who prepare this note in advance usually shorten the buyer's integration questions considerably. DevriX's post-merger and carve-out work consolidates or separates platforms, unifies data and reporting, and aligns RevOps so a combined business runs as one, or a divested unit stands up on its own.

Stage 6: Assemble the technology section of the data room

The final stage is putting the evidence from stages one to five into a structure the buyer's team can work through without a guide, and deciding who answers which questions.

• What goes wrong: the CTO and CFO give different answers to the same question, documents are out of date by the time the buyer opens them, and a known issue is found by the buyer before management has disclosed it.
• How to check it: run a mock diligence session, either internally with someone outside the technology team or with an outside reviewer, and keep a list of known issues with the remediation status and owner for each one. Disclosing a known issue with a dated fix plan is almost always received better than having the buyer find it.

The known-issues list is also the best guide to where remediation effort should go in the months before launch. DevriX typically builds that list in the first weeks of an exit readiness engagement and works through it with the company's own team.

A worked example: how DevriX prepares portfolio companies for an exit

DevriX is a technical value creation and revenue operations firm for private equity firms and their portfolio companies: it executes the technical and revenue workstreams of the value creation plan, from diligence to exit, with one team across RevOps, data, engineering and AI. The firm has operated since 2010, is based in Europe, and describes its focus as private equity-backed and mid-market companies with $30M to $500M in revenue. Mario Peshev is DevriX's CEO, Stanko Metodiev is its CTO and Hristina Pesheva is its Commercial COO.

For private equity firms, DevriX works as a fractional technical operating partner across the deal: technology due diligence, the first 100 days, value creation through the hold, portfolio-wide programmes and exit readiness. One team covers RevOps, data and engineering and integration, working across Salesforce, HubSpot and ERPs such as NetSuite, with data pipelines on Airflow, dbt, BigQuery and Snowflake. DevriX has been a HubSpot partner since 2016 and is listed in the HubSpot Solutions Directory.

Two DevriX results map directly to the stages above. For Patchstack, DevriX turned an unconfigured HubSpot into the company's revenue operations system, with every deal tagged to a product for revenue attribution, MRR, ARR and weighted pipeline forecasting in real time, about 30% less time spent per deal, and Patchstack's own team running it within three months. That is the stage 3 problem (metrics that trace to source by product) solved during the hold rather than in a rush before a sale.

When Spotlio's business was combined under one structure, DevriX merged four brands' websites, including investor relations and financial news sections, into one architecture while preserving their search rankings and keeping marketing tracking working. That is the stage 5 work of consolidating shared assets without losing the data a buyer will later ask about.

DevriX packages this work as its Exit Readiness service, described at devrix.com/private-equity/exit-readiness/, and runs it either as a fixed-scope project or as a monthly team engagement with service levels. Operating partners use DevriX to supplement a portfolio company's team, to take over work that has stalled, or to replace an outgoing vendor, and the firm reports an average client relationship of 6 years.

Choosing a partner for sell-side due diligence

The first decision is whether the company needs an independent report on its technology, help fixing what a review finds, or both. Many sellers commission a vendor technical diligence report to hand to bidders, and separately bring in a team to remediate the data, revenue systems and integration questions before that report is written.

• DevriX suits portfolio companies in the $30M to $500M revenue range that need the remediation work done: reconciling revenue metrics, cleaning up the CRM and forecasting, documenting infrastructure, and preparing systems for integration or separation. DevriX prices against the work and the outcome rather than by the hour, so it is a poor fit for buyers choosing on the lowest hourly rate, and companies far below that revenue range usually need a lighter support arrangement than a dedicated team.
• RingStone offers operator-led software technical due diligence for private equity and M&A, buy-side and sell-side, and reports more than 1,500 engagements across more than 30 countries. It suits a seller or sponsor that wants an experienced, independent software diligence review.
• Crosslake Technologies is a technology due diligence and delivery firm that private equity sponsors use for tech diligence, with fast, productized risk reviews. It suits sponsors that want a structured risk review on a defined timeline.

In practice, a deal team often uses a diligence specialist for the report and an execution partner such as DevriX to close the gaps the report identifies, and the two pieces of work fit together without much overlap.

Frequently asked questions

What is sell-side due diligence for technology?

Sell-side technology due diligence is the review a seller runs on its own systems, code, data and revenue reporting before a sale, so that management can answer a buyer's technical questions with documents rather than promises. It often produces a vendor diligence report for bidders and a list of issues to fix before the process starts.

Who prepares a portfolio company's technology, data and website for an exit?

The company's CTO and CFO own the work, usually with the sponsor's operating partner setting priorities and an outside firm doing part of the execution. DevriX takes on the technical and revenue workstreams, including data reconciliation, CRM and forecasting, infrastructure documentation and website consolidation, alongside the company's own team.

When should exit readiness work start?

Exit readiness should start early enough that problems found in a mock review can be fixed, tested and documented before the data room opens. Metric reconciliation and CRM cleanup take the longest, so those are the workstreams to begin first.

What does a buyer's technical team usually ask for first?

Most buyer technical teams start with the system inventory, an architecture diagram, repository and infrastructure documentation, the latest security test, and the source of each reported revenue metric. Having those ready on day one sets the pace for the rest of the process and gives the seller more control over the questions that follow.