Why Code Quality Audits Are the MS66BN of M&A Technical Due Diligence

When Tech Stacks Get Graded: The Hidden Value of Technical Due Diligence

When one tech company buys another, they need to look under the hood. I want to show you why a company’s code quality can make or break an M&A deal. Think of it like grading rare coins. The difference between an average MS64 and a premium MS66 often comes down to tiny details. In tech, those details are in the code.

The Grading System for Technology Stacks

Code Quality as the First Marker

Recently, we audited a codebase that looked decent at first—like an MS64BN coin. But it had some technical debt. The real story came out when we looked closer:

• Documentation: Clear specs and comments, like a coin with full mint shine
• Testing coverage: Over 85% unit tests—few flaws on the surface
• Architecture: Clean and well-organized, like sharp details on a premium coin

Scalability Assessment: The Hidden Premium Factor

One fintech startup’s setup seemed functional but limited—like an AU58 grade. Then we spotted this:

if (serverCapacity <= currentLoad * 1.2) { triggerScaleAlert(); }

That tight margin became a big issue. It dropped the acquisition price by 18%.

Technology Risk Analysis: The Grading Controversies

Just like experts debate RB vs. BN coin grades, tech assessments can be subjective:

"We thought the old system was stable but dated—a BN. After digging in, we saw RB potential. Key parts could be updated without losing what worked."

The MS66BN Surprises: When Hidden Quality Emerges

In one deal, a company we valued at $15M turned out to be a hidden gem—a true MS66BN. Here’s what we found:

• A unique compression method (like hidden mint shine)
• Innovative data structures with patents pending
• A flawless security record—no past issues

That bumped the final price up by 32%.

Practical Grading Techniques for Technical Due Diligence

The Lighting Setup Matters

Coin graders use different lights to see details. Tech auditors need different angles too:

• Static analysis: Our go-to for checking code quality
• Load testing: Shows how things hold up under pressure
• Architecture review: The close-up look that reveals what pictures miss

Conclusion: Why Technical Grading Makes or Breaks Deals

After many M&A tech audits, I’ve learned this: like rare coins, tech stacks only show their true value under a careful eye. The gap between overpaying and finding a bargain often comes down to three things:

1. How deep you look
2. How you assess what you find
3. Spotting those hidden signs of quality

Today, a solid tech review isn’t just paperwork. It’s what separates an okay deal from a great one.

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