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\n\t\t\t\t\t\t\tMatt Van Itallie<\/span> \n\t\tMatt Van Itallie is the founder and CEO of Sema, which provides codebase analytics for M&A.\t<\/p>\n<\/div>\n<\/div>\n Investment activity is down<\/span> now, but it\u2019s likely to pick up in 2023. And when investments ramp up, so does M&A. Will your organization and your code pass technical due diligence when it\u2019s your turn?<\/p>\n Let\u2019s start with the positives: If an investor is proceeding with technical due diligence (TDD), you\u2019ll likely pass. You\u2019ve passed the tests for product-market fit, financials and competitive differentiation well enough that they now want to look under the hood.<\/p>\n Here\u2019s the not-so-good news: Companies can pass the business test, but fail TDD. Especially for non-technical executives, the code-examination process can feel like \u2026 an audit \u2026 conducted in another language \u2026 with a loud clock ticking away incessantly. Not fun.<\/p>\n Our firm has analyzed the code of hundreds of billions of dollars worth of deals, from three-person software companies to firms with thousands of developers. We\u2019ve looked at the contributions of over 200,000 developers who have collectively written 4 billion lines of code.<\/p>\n \n\t\t\tPoor codebase health is more often than not \u201ccaused\u201d by other teams rather than by engineering.\t\t\t\t\t<\/p>\n<\/blockquote>\n<\/div>\n From that dataset, we\u2019ve distilled eight questions that you can ask yourself now. Even if TDD is not on the horizon, having good answers to these questions will ensure your codebase is healthy.<\/p>\n Before we go any further, here\u2019s a bit more context on technical due diligence for software:<\/p>\n The goals of TDD are to:<\/p>\n We say \u201ccodebase\u201d because it\u2019s more than just the source code that\u2019s under the magnifying glass. Your documentation, processes and most importantly, the software developers will also be under examination. The functional scope of TDD includes code quality, code security, intellectual property, DevOps, IT and, sometimes, product management.<\/p>\n Because it\u2019s more than just the quality of the code, we talk about codebase health <\/strong>to encompass all of these areas.<\/p>\n Making sure that the organization is working on the software products that matter most is an important part of de-risking the deal.<\/p>\n This may sound obvious, but sometimes, a company claims to be working on a new product, but will actually be spending the majority of their time on custom development for major clients or not working much on anything at all.<\/p>\n Consider this example of a company\u2019s software development over two years. Not only is there a cyclicality in the work (higher in summer), but it has declined significantly over time, especially in 2022.<\/p>\n Important point: Here, and for all questions in TDD, any answer might be sufficient to clear the examination.<\/p>\n This leads us to TDD Theme #1: The most important part of TDD is ensuring the state of the codebase is aligned with the organization\u2019s business objectives. <\/strong>For example, U.S. education software companies typically see cyclical software development \u2014 higher in summer and lower in fall \u2014 to minimize disruption for customers when school starts.<\/p>\n We like to distinguish between underlying <\/em>code quality to include such measures as its maintainability or the ability to be extended, and the functional <\/em>code quality \u2014 how the product works for users.<\/p>\n \u201cTechnical debt\u201d is another way of describing any lack of perfection in the underlying code.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" Matt Van ItallieContributor Matt Van Itallie is the founder and CEO of Sema, which provides codebase analytics for M&A. Investment activity is down now, but it\u2019s likely to pick up in 2023. And when investments ramp up, so does M&A. Will your organization and your code pass technical due diligence when it\u2019s your turn? Let\u2019s […]<\/p>\n","protected":false},"author":1,"featured_media":1234424,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[],"class_list":["post-1234422","post","type-post","status-publish","format-standard","has-post-thumbnail","category-celebrity-gossip"],"_links":{"self":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/1234422","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/comments?post=1234422"}],"version-history":[{"count":0,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/1234422\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/media?parent=1234422"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/categories?post=1234422"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/tags?post=1234422"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
Contributor<\/span>\n\t\t<\/p>\n<\/div>\n\n
A quick primer on TDD<\/h2>\n
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Question 1: What have you been working on?<\/h2>\n
Question 2: How much unit testing does your codebase have?<\/h2>\n