Dry Powder: The Private Equity Podcast Tech Due Diligence: From the Outside, In
9 snips
Jun 28, 2022 AI Snips
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Software Provider vs. Operator
- Bain analyzed a software company presented with a 5x valuation as a software provider.
- They discovered it was actually a software operations company, worth 1.5-2x, leading to a valuation adjustment.
Effective Tech Due Diligence
- To ensure high-level tech due diligence, focus on the deal thesis and value creation.
- Don't just treat it as a box-checking exercise, but deeply analyze vulnerabilities and opportunities.
Excessive Releases
- A networking firm did 12-14 major hardware/software releases yearly, driven by perceived customer needs.
- Outside-in analysis revealed 70% of customers didn't use the first release due to bugs and preferred fewer releases.