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INFRASTRUCTURE
Infrastructure
Due diligence scope
Reviewing infrastructure in a technology due diligence is important for several reasons:
Operational efficiency
Evaluating the infrastructure helps assess the efficiency and effectiveness of the target company's technology operations. This includes reviewing hardware, software, networks, data centers, and other IT systems. Understanding the infrastructure's capabilities, scalability, and performance allows potential investors or acquirers to determine if it can support the current and future needs of the business.
Risk assessment
Infrastructure review helps identify potential risks and vulnerabilities that may impact the target company's technology operations. This includes assessing the security measures in place, data protection protocols, disaster recovery plans, and compliance with relevant regulations. Understanding the potential risks allows the acquiring party to evaluate the associated costs, liabilities, and potential impacts on the investment decision.
Scalability and growth potential
Assessing the infrastructure helps determine if it is capable of scaling and supporting future growth. This includes evaluating factors such as capacity, bandwidth, storage, and processing power. Understanding the scalability of the infrastructure is important to ensure that it can accommodate increased demands as the business expands.
Integration and compatibility
In cases where the technology being evaluated will be integrated with existing systems or platforms, reviewing the infrastructure is crucial. It helps determine if there are any compatibility issues or potential challenges in integrating the target company's technology with the acquiring party's infrastructure. This evaluation allows for a smoother post-acquisition integration process.
Cost and resource optimization
Infrastructure review helps identify opportunities for cost optimization and resource allocation. It provides insights into the current infrastructure's efficiency, utilization, and potential areas for improvement. Understanding the infrastructure's strengths and weaknesses allows potential investors or acquirers to evaluate if there are any opportunities to optimize costs, streamline operations, and improve overall performance.
Regulatory and compliance considerations
Evaluating the infrastructure helps assess if the target company is compliant with relevant regulations and industry standards. This includes evaluating data privacy practices, cybersecurity measures, and other regulatory requirements. Ensuring compliance with applicable regulations is essential to mitigate legal and reputational risks associated with technology operations.
Infrastructure
High-level scope
System overview
Understand the overall architecture and design of the company's technology systems. This includes hardware and software components, networks, and databases.
Hardware
Evaluate the capacity, scalability, reliability, and lifespan of the company's hardware. This could include servers, network equipment, storage devices, and others.
Network
Assess the company's network infrastructure, looking at the design, performance, capacity, and security measures. Also, consider the availability and redundancy of network connections.
Cloud services
If the company uses cloud services, identify which ones and evaluate their integration, reliability, and cost. Understand how data is stored and secured in the cloud.
Databases
Identify all databases used by the company and assess their design, capacity, performance, and security. Check how data is structured, managed, and accessed.
Software stack
Understand the technology stack of the company. This includes the operating systems, development languages, frameworks, and other software used.
Scalability
Assess the scalability of the company's infrastructure. Can it handle increased load if the company grows?
Security measures
Review the security measures in place for the company's infrastructure, including firewalls, encryption, intrusion detection systems, and others.
Disaster recovery and business continuity
Understand the company's plans for disaster recovery and business continuity. Is there redundancy built into the infrastructure to allow operations to continue if a part of the system fails?
Compliance
Check if the company's infrastructure complies with any relevant regulations or standards, such as data privacy laws or industry-specific rules.
Maintenance and support
Understand how the company maintains and supports its infrastructure. This includes procedures for updating software, replacing hardware, and resolving technical issues.
Costs
Evaluate the costs associated with the company's infrastructure, including hardware costs, software licenses, cloud service fees, maintenance costs, and more.