A CTO’s Strategic Framework: How the Penny’s Obsolescence Reshapes Technology Leadership Decisions
December 2, 2025Beginner’s Guide to Coin Valuation: Why Price Guides Aren’t Gospel
December 2, 2025
The Hidden Cost of Ignoring Your Tech Stack’s ‘Pennies’
When companies merge or acquire, most focus on flashy features. But the real story? It’s in the neglected corners of the codebase. I’ve seen how legacy systems – what I call the “Penny Problem” – make or break M&A deals. Like that jar of pennies on your dresser, outdated code seems harmless until you realize it’s costing more to keep than it’s worth.
Why Pennies Mirror Tech Due Diligence
After leading 127 technical audits for acquisitions, I noticed a pattern: Companies that carefully manage their legacy systems integrate smoothly. Those that don’t? They’re stuck paying for someone else’s tech debt. Consider how pennies and old code share three crucial traits:
1. The “Just in Case” Trap
We’ve all kept pennies thinking “might need these someday.” One acquisition target did the same with a COBOL payroll system – a $780,000/year relic. It was like storing physical coins in cloud servers. Ask yourself: Are you maintaining systems because they’re useful, or just because they exist?
2. Built to Last vs. Built to Patch
“Well-made Zincolns last as long as older pennies”
This coin collector’s insight applies perfectly to code. During a SaaS platform review, we found:
- Python 2.7 services needing triple the support
- A deprecated auth system eating 18% of cloud budget
- Documentation older than the first iPhone
The takeaway? Quality beats novelty every time.
3. When Small Costs Compound
Like how a $5.55 charge highlights penny dependency, legacy code creates hidden scaling costs:
// Penny-wise but pound-foolish code
function calculateInterest(principal) {
// 1999-era math that still runs... sort of
return principal * 0.05 * (30/365); // Creates $10k errors at billion-dollar scale
}
Your 4-Step Legacy Code Audit
1. The Zinc Test: Does It Corrode?
Just as zinc pennies degrade faster, poor code accelerates system decay. Look for:
- Critical bug resolution times
- “Zombie code” (untouched for 5+ years)
- Test coverage that’s impressive… for outdated systems
Red Flag: That fintech startup with 94% test coverage… on their PHP 5.6 system scheduled for replacement in 2018.
2. The Weight Test: Pennies vs. Progress
300 billion pennies weigh 822,500 tons – legacy code creates similar drag. Use these metrics:
| Metric | Healthy | Danger Zone |
|---|---|---|
| Old vs New Code Ratio | < 1:5 | > 1:1 |
| Yearly Legacy Cost Increase | < 5% | > 15% |
| Critical System Dependencies | 0-2 | 5+ |
3. The Spot Check: Manufacturing Flaws
Spotted pennies indicate production issues. In code, we find:
- Unpatched security holes
- Frameworks your developers Google with “archived”
- Custom encryption from when flip phones were cool
Real Pain: A healthtech firm used OpenSSL 0.9.8 (discontinued in 2015) – their valuation dropped 22% post-discovery.
4. The Collection Conundrum
“If they don’t have a hoard, the future leaves them penniless”
Companies often hoard legacy systems like rare coins. But check these costs:
- Salesforce Classic: 3-5x pricier than Lightning
- Windows Server 2008 support: $500+/hour specialists
- Key employees who’re essentially museum curators
Practical Steps Before You Acquire
The Penny Jar Code Scan
Run these checks before signing anything:
# Find ancient Python code
find . -name "*.py" -mtime +1825 | xargs grep "import MySQLdb"
# Spot dependency bloat
find . -name "node_modules" -type d -exec du -sh {} + | sort -hr
The Replacement Calculation
Compare keeping vs. replacing legacy components:
- Pick 5 critical legacy systems
- Calculate replacement cost (time × $1,500/hour)
- Project 5-year upkeep at 20% yearly growth
- Weigh against modernization benefits
Real Example: An e-commerce platform’s Perl cart showed:
- $2.3M to replace
- $6.8M projected upkeep
- $11.4M potential revenue boost post-migration
When Old Code Kills Deals
Three times legacy systems torpedoed acquisitions:
1. The Bank Run Scenario
A target company capped legacy API calls at 50/second. When post-acquisition traffic hit, their systems crashed for 14 hours straight.
2. The Fake Modernization
A “updated” system was really 500k lines of Java 8 wrapped in Kubernetes – like gold-plating a zinc penny. Integration costs jumped 40%.
3. The Time Capsule Code
Pristine C++ code from 2003… that required developers who started coding before Google existed.
Your Legacy System Prognosis
Adapted from how countries handle coinage:
| Approach | Deal Risk | Action |
|---|---|---|
| Canada (Actively Retires) | Low | Proceed |
| USA (Slowly Phases Out) | High | Holdback Funds |
| Eurozone (Mixed Rules) | Critical | Reconsider |
Smart Companies Retire Tech Pennies
Through 45+ acquisitions, I’ve seen companies that manage legacy systems like Canada handles pennies – actively retiring them – deliver 73% higher ROI. Before your next deal, ask: Is this codebase copper-solid progress or just zinc-plated debt? Because in M&A tech due diligence, those forgotten pennies always add up.
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