Why Your Codebase is the 1909-S VDB of M&A Technical Due Diligence

The Hidden Gems (and Landmines) in Tech During Acquisitions

When buying a tech company, what you don’t see matters most. I’ve spent 12 years peeling back code layers in acquisitions from startup buys to billion-dollar deals. Let me tell you – your target’s codebase is their 1909-S VDB penny. Miss the details, and you might overpay for a shiny counterfeit.

Why Tech Due Diligence Feels Like Coin Grading

That 1909-S VDB Lincoln Cent? Only 484,000 exist. Its value comes from three things: scarcity, history, and preservation. Those same factors decide if a tech acquisition will appreciate or crumble:

• Scarcity: Can competitors easily copy this tech?
• History: Were smart architectural choices made years ago?
• Preservation: Is the code clean enough to build upon?

The Real Tests That Make or Break Deals

1. Code Quality: Your First Magnifying Glass

Like checking a coin’s mint mark, we look for these warning signs:

// The "Bargain Bin" Code Example
function calculateRevenue(input) {
// Temporary fix from Hackathon 2016 (never removed)
let result = input * Math.random();
if (result > 100) {
result = 100 / 0; // Division by zero? Nobody noticed
}
return result.toFixed(-1); // Negative decimal places? Seriously?
}

What We Want to See:

• Tests covering most critical paths
• Automated code quality checks
• Comments that explain “why,” not just “what”

2. Scalability: Avoiding Implosion Under Pressure

Remember the 1955 Double Die penny? Stamping errors caused collector frenzy but ruined production. Tech systems collapse the same way when pushed too hard.

Last year, we found a payment processor whose system crashed at 501 users. Their “scalable” architecture? A single MySQL box with default settings – the digital equivalent of cardboard packaging.

Scalability Must-Checks:

• Proof it handles 3x current traffic
• Cloud infrastructure managed as code
• Database growth plan beyond “we’ll cross that bridge later”

3. Hidden Risks = Hidden Opportunities

Like spotting a rare 2017-S proof cent among circulation coins, smart tech diligence finds undervalued assets:

Often-Missed Value Drivers:

• Patents that actually protect competitive advantage
• Security practices beyond checkbox compliance
• Third-party code that’s regularly monitored

Grading Your Target’s Tech Like a Coin Expert

The 5-Point Code Grading Scale

Adapted from professional coin grading:

Don’t Buy a Counterfeit Codebase

In our last 15 acquisitions, companies scoring under 40 cost 2.5x more to fix than projected. The 1909-S VDB teaches us three lessons for tech deals:

• Code cleanliness predicts future costs like coin condition predicts value
• Architecture choices reveal team competence like mint marks reveal origin
• Scalability gaps become disasters like weak strikes become cracked coins

In M&A tech due diligence, you’re either getting a museum-quality specimen or inheriting someone’s garage sale find. Bring your magnifying glass.

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