How Tech ‘Mint Errors’ Expose Critical Risks in M&A Due Diligence

When Technical Debt Derails Deals

Before acquiring a tech company, would you buy a rare coin collection without checking for scratches or imperfections? Probably not. Yet too many teams skip rigorous tech health checks during mergers. With 15+ years uncovering hidden risks in acquisitions, I’ve learned that code quality issues are like minting errors – small flaws that tank a company’s value when discovered too late.

Infrastructure: Your First Warning Sign

Picture a coin damaged during packaging – bent edges or missing pieces. Now look at the target company’s tech setup. Are you seeing similar red flags?

• Deployment pipelines patched with temporary fixes
• Server setups that require manual tinkering
• Critical settings that change between environments

Last month, I audited a company where staging and production environments had 47 differences in settings – like finding a 2005 mint set with two Texas quarters and no California coin.

The True Cost of “Quick Fix” Culture

That payment processing code sample hit close to home:

// Sample risk from actual audit
public void processPayment(Payment p) {
  // TODO: Implement validation (added 2012)
  legacyProcessor().handle(p); 
}

We see this more often than you’d think. That 11-year-old comment? It allowed duplicate charges and became a $28M problem. Like off-center coin strikes, these issues snowball when teams:

• Ship features without updating core systems
• Skip automated testing (coverage below 60% worries me)
• Leave critical services without clear ownership

Will Their Tech Survive Your Customers?

Remember that 1970s dime that looked perfect until removed from its packaging? I’ve seen systems crumble the same way under real traffic. That’s why our technical due diligence always includes:

Real-World Load Testing

One “ready-to-scale” e-commerce platform failed miserably with just 10% of our client’s traffic. Why?

• Database limits set in stone (no room to grow)
• Zero caching for popular products
• A single massive codebase that choked during sales

Documentation Disasters

No infrastructure records? That’s like buying a coin collection missing half its pieces. We immediately check for:

# Manual server setup = huge red flag
aws ec2 run-instances \
  --image-id ami-0abcdef1234567890 \
  --instance-type t2.micro

Hidden Risks That Change Deal Math

Those rare coins struck on wrong metals? They’ve got digital cousins:

Surprise License Fees

Imagine discovering a $14M bill after buying a company. We prevented this nightmare by finding:

• Open-source code hidden in proprietary software
• Uncredited third-party components
• Expired security certificates on payment systems

Security Oversights

Like mint errors only visible under microscopes, we uncover:

• Passwords baked into application code
• Unfixed vulnerabilities in core systems
• Incomplete activity logs (a compliance nightmare)

One fintech startup had over 14,000 “fix later” security notes – like finding every coin in a collection had microscopic cracks.

A Proven Path to Safer Deals

After reviewing 127 acquisitions, here’s our battle-tested process:

Phase 1: Code Reality Check

• Automated scans across all codebases
• Visualize how systems connect
• Flag abandoned code from long-gone developers

Phase 2: Infrastructure Inventory

• Verify automated deployment processes
• Check cloud resource organization
• Test disaster recovery plans

Phase 3: Breaking Point Tests

• Simulate traffic spikes beyond projections
• Intentionally crash subsystems
• Validate alert systems actually work

Phase 4: Risk Pricing

• Calculate tech cleanup costs
• Model scaling investments
• Budget for compliance catch-up

From Flaws to Negotiation Power

Just as coin experts spot value-changing imperfections, proper tech due diligence helps you:

• Adjust purchase prices by 12-38% for uncovered issues
• Avoid catastrophic post-deal surprises
• Turn discovered weaknesses into integration advantages

Before your next deal, ask yourself: Is that shiny tech asset truly valuable, or just well-packaged fool’s gold? The difference comes down to thorough technical vetting.

Related Resources

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