IT Due Diligence: Making or Breaking Deals in PE’s New Frontier

The biggest risks in your next deal aren’t in the data room. They’re buried in the tech stack.

All That Glitters Is Not Gold

The deal looked airtight: strong EBITDA, a resilient market position, and a seasoned management team. The synergies were compelling, and the exit path looked smooth.

Two years on, the investment is dragging down the portfolio and it has nothing to do with prevailing market conditions. The real problem? A patchwork tech stack that’s outdated and nowhere near ready to scale. Fixing it is going to be expensive. Meanwhile, value continues to leak out. The forecasted growth now seems wildly optimistic, and the exit horizon is fading.

This feels completely counterintuitive to our PE executive. How could their detailed and precise modeling have missed a risk big enough to crater the growth plan?

But this is exactly how deals unravel. Technology blind spots drain far more value from deals than poor financial forecasting. Time and pressure: that’s all it takes for those weak spots to blow wide open.

In this article, we show why IT Due Diligence is “deal-critical”, and how leading PE firms are already leveraging it to outperform their competitors.

Seal the Deal, Ditch the Baggage

What you can’t see can still cost you

Hidden IT flaws have sunk more deals than bad market timing. And in a digital-first market, the cracks start to appear fast.
This isn’t rare. Across the PE industry, firms are getting blindsided after the ink is dry. What looked like a clean deal turns into a slow puncture, leaking value through legacy tech, patchwork integrations, and hidden security gaps.

It feels like routine operational drag – until it takes a chunk out of your exit multiple.

The front runners aren’t flying blind

At this stage – before the LOI is signed – speed can blind you to risk. The winners are the ones who scrutinize the architecture and threat exposure. They prioritize precision over pace. As the Marines say: “Slow is smooth, smooth is fast.”

A New Playbook: Checklists Out, Code Reviews In

Where the real risk lives now

Traditional due diligence meant reams of financials, org charts, contracts, and churn metrics. But today you won’t find the most serious risks in those stacked folders. They’re buried in code or fragile integrations held together with corporate duct tape: years of workarounds and layers of quick fixes.

That’s why forward-leaning PE firms are rewriting the playbook. They understand that technology no longer just supports the business model. In many cases, it is the business model. How the tech stack is built directly shapes how much upside the deal can produce – and how fast.

Winners don’t go it alone

The front runners have an ace up their sleeve: GenAI and automation — in the hands of technical specialists with the engineering chops to turn AI outputs into actionable insights. That’s how they speed up code reviews and flag scalability bottlenecks before integration goes off the rails.

What in-depth analysis reveals

A proper technical deep dive tells you how quickly you can execute post-close plans, how costly modernization will be, how exposed you are to cyber threats, and how realistic your revenue forecasts really are.

That’s why Exadel takes a different approach to ITDD — by identifying risks and real value early on. (See ‘How Exadel Does It Differently’ below.)

This kind of diligence looks more like a full technical audit. It involves reviewing real code, stress-testing scalability, and probing for modularity. You talk with the engineers who built it — not just the CFO who reports on it. IT is far from static. It’s a layered, living system that only reveals its truth once you dig deeper.

At Exadel, we’ve made this shift our mantra: Go deeper now to go faster later.

The Hidden Tax of Technical Debt

This isn’t an isolated scenario. CIOs report that 10% to 20% of product budgets earmarked for new product development often vanish into technical debt – to cover patchwork fixes and legacy repairs. In some firms, that technical debt burdens nearly 40% of their core systems. That kind of inefficiency is guaranteed to choke growth and weaken exit value. And that’s why you need to spot it early — while you can still fix it.

Go Deep to Reap Rewards

Same timeline. Better insights.

Going deeper doesn’t mean dragging out the timeline. It often stays the same – what changes is who’s doing the work and what they’re looking at. You’re trading surface-level checklists for hands-on reviews by engineers and cybersecurity experts. It’s the same timeline, but with sharper focus and better answers.

This is where AI adds value. It can do the heavy lifting of automating code analysis and exposing cost and scalability risks buried in the stack. With the risks identified, the experts know where to dig in to pinpoint the upside before anyone else even sees it.
But AI alone won’t give you the full picture. You still need the subject experts who can make sense of the results and translate those into priorities. It’s this combination that allows you to move at speed and with precision.

Now let’s speed it up

This is where AI matches depth with speed. AI models simulate how systems will perform at scale. Investors get the insights needed to plan smarter and act faster.

This is the point where ITDD flips the switch from defensive diligence to a value creation engine. The firms that treat it that way aren’t just protecting deals — they’ve found a way to outperform the market. Going deep no longer means going slow. That’s how Exadel is able to flag issues – from legacy code dependencies to hidden scalability blockers faster than before.
When you treat ITDD as a strategic function, you step into ownership with real leverage. You know where the bottlenecks are before they become blockers. You’ve sized up the cost of modernization before it hits the P&L. And you already know which parts of the stack can scale, integrate – or stall.

Here’s the payoff

• Your post-close plans move faster. Fewer surprises mean integration timelines tighten and your growth initiatives launch faster.
• Value creation gets sharper. AI helps PE firms gain new value by tapping into automation opportunities, unused IP, or scalable platforms that were under-leveraged.
• Risk mitigation becomes your strategic advantage. It isn’t just about sleeping better at night. It gives your LPs more confidence, strengthens the exit case, and helps your portfolio companies run more predictably throughout the hold.

The DNA of the Right ITDD Partner

If you want ITDD to move your deals forward, you need an engineer – not another advisor. Here’s a quick checklist for the kind of partner you need:

• Engineering-first: They’ve built and scaled real systems, so they know where risk hides and values lives.
• AI-native: AI is baked in from day one – speeding up diligence without sacrificing depth.
• They think like investors. They speak the deal team’s language, tying the tech directly to scalability, value creation, and a strong exit.
• Hands-on expertise: Cybersecurity, data privacy, architecture — no generalists here, only specialists able to sniff out hidden risks.
• Speed without shortcuts: They move faster and smarter — defusing any surprises before they blow up your thesis.

How Exadel Does it Differently

Eight pillars. One blueprint.

Most advisors hand you a checklist. We give you a head start.

Our diligence framework runs across eight IT pillars. These aren’t generic scorecards — they generate tailored diagnostic questions, benchmark KPIs, and deliver actionable insights tied directly to your deal thesis.

The 8 Pillars Shaping Successful Due Diligence

This is how Exadel helps deal teams uncover risk and gain a clear edge.

From code to competitive edge

Where others skim the surface, we go deep into the code, integrations, and infrastructure to expose future bottlenecks and spot hidden value others overlook.

We evaluate technology differently — as the people who build and scale it. That’s why our engineers know where the weak points are and where the upside is to be found.

AI first, not an afterthought

Because AI is built in – not bolted on – we accelerate the entire process:

• Flagging risks earlier
• Surfacing scalable modules, untapped automation, and reusable assets
• Giving you clarity on cost, speed, and scalability — before the ink is dry

Smarter deals. Faster value.

This isn’t a one-size-fits-all diligence exercise. It’s precision engineering for smarter deals, faster value creation and stronger exits. While others are still checking boxes, we’ve already identified the value.
Deals rarely unravel because of market forces — it’s what’s buried in the stack. We make sure you see it first.