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Case study

Tech Due Diligence of an online store before acquisition

Unicornly performed an evaluation of an eCommerce company operating within the consumer staples industry. The goal was to estimate time, cost and risks related to integrating their systems with acquisitor’s infrastructure.

Background

The assessment for a company operating worldwide as a Venture Capital firm. This VC is a part of a larger company and has a main goal of developing and investing in new products and businesses that address emerging customer needs within the consumer staples industry.

The VC was interested in acquiring and adding to their portfolio a company that was a competitor to VC’s owner. Since Unicornly was working with this Venture Capital on various projects for the last 8 years, it was a natural decision for the company to choose us as a partner for the Tech Due Diligence project, preceding the potential acquisition.

Assessment

The IT situation of the assessed company was that albeit having rather a limited IT budget and fairly small team, they built a complex IT infrastructure including plenty custom-built solutions, such as their system for logistics and other tools. From the perspective of a Venture Capital it was crucial to understand the current state of these core systems and to estimate potential time, cost and scale of their planned integration with it’s own infrastructure. Another important concern was related to GDPR and cyber security of these systems, which also were to be the subject of assessment.

The Tech Due Diligence took Unicornly 3 weeks and was performed remotely. The team consisted of a senior consultant and a tech lead. The process started with a kick-off meeting with stakeholders to discover and understand their main concerns and to grasp the business context of the diligence.

As a second step, Unicornly performed Q&A sessions with CEO and CTO of the assessed company. Afterwards, we went through the custom-built software and related hosting infrastructure. On top of a general health-check, we also assessed competences of key technical team members. We put particular stress on GDPR compliance and cybersecurity of assessed elements and processes. Eventually, the team identified and verified all of third party components. 

The main finding of the Tech Due Diligence was that the assessed company didn’t use any source code versioning system for the custom-built IT solution, which posed a significant risk. Another red flag was related to the fact that the analysed system was overly complex, with 500+ database tables and lots of different modules, which were very complicated, hard to understand and biased.

Another alert was raised by the fact that there was no CI/CD practices implemented and software updates were performed manually, what is a heavy security risk. Moreover, the assessment detected plenty of other cyber security issues, including outdated software modules with vulnerabilities, which further increased the overall level of vulnerability of the system.

Results

As a result of the Tech Due Diligence, Unicornly provided a detailed report that described current state of assessed IT systems and presented it to the stakeholders. The report listed associated risks and included a set of recommendations for mitigating them. 

Our suggestions were very precise and included specific steps to undertake, such as for example: implementing Git, upgrading PHP and Prestashop to the latest versions and migrating the whole system to AWS public cloud. We also provided a detailed  roadmap for integrating the assessed system with VC’s infrastructure and estimated the time and cost associated with such a process.

After the Tech Due Diligence, Unicornly supported the Venture Capital with delivering some of the recommended actions. We implemented a source code versioning system and introduced automated CI/CD processes. We also resolved the most urgent security issues and left the rest of the action steps to the team at the VC.

The tangible value of the Tech Due Diligence report allowed Venture Capital not only to propose accurate and relevant financial terms of the transaction, but also to successfully finalise the M&A process after the assessed company implemented Unicornly’s recommendations and prepared IT systems for integrations.

Unicornly acted as a technical due diligence vendor on a transaction supporting our growth strategy. The team was extremely professional and flagged important issues. I would certainly recommend them to any company that is considering buying a tech-enabled business.

Michael Thain
Tech Director at ZX Ventures

Related services

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Unicornly acted as a technical due diligence vendor on a transaction supporting our growth strategy. The team was extremely professional and flagged important issues. I would certainly recommend them to any company that is considering buying a tech-enabled business.

Michael Thain
Tech Director at ZX Ventures

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