Technology Due Diligence in M&A: What Buyers in India Must Check

Technology due diligence in Indian M&A transactions is consistently under-resourced relative to financial and legal due diligence — and the post-acquisition technology surprises that result are consistently among the most expensive. This guide covers the five domains that technology due diligence must address for Indian acquisitions.

Domain 1: Infrastructure and Architecture Assessment

The infrastructure assessment documents: the total inventory of servers, networking equipment, and end-user devices, the current infrastructure cost structure (hosting, licensing, support contracts), scalability of current architecture against post-acquisition operational requirements, and the technical condition and remaining lifecycle of hardware assets.

In Indian acquisitions, a consistent finding is infrastructure that has been deferred — hardware running past end-of-warranty or end-of-life, server rooms without adequate redundancy, and network configurations that have grown organically without structured design. These deferred costs become the acquirer's immediate post-close problem.

Domain 2: Software Assets and IP

The software IP assessment verifies: that source code is owned by the target company (not by a vendor or ex-employee), that open-source licences used in the codebase are compatible with the acquisition structure, that software licences for commercial products are transferable, and that the development team that understands the codebase will remain post-acquisition.

Domain 3: Technical Debt Quantification

Technical debt — the accumulated cost of architectural shortcuts and undocumented complexity in software systems — is one of the most significant post-acquisition surprises in Indian technology company acquisitions. The due diligence process should produce a quantified estimate of the technical debt remediation cost and an assessment of how quickly that debt will constrain post-acquisition growth plans.

Domain 4: Cybersecurity and Compliance

Security due diligence in Indian acquisitions must specifically address: DPDP Act compliance status for companies handling personal data, breach history and incident response maturity, cloud configuration security (misconfigurations are extremely common), access control maturity (privileged access, offboarding processes), and data sovereignty compliance for companies with international operations.

Domain 5: Vendor and Contract Risk

The vendor contract review should identify: key vendor relationships with termination rights on change of control, mission-critical software where licences are non-transferable, IT contracts with auto-renewal provisions that create post-close obligations, and outsourcing relationships where knowledge transfer would be required in the event of contract termination.