We want to acquire a smaller competitor that claims to have built a highly automated, AI-driven delivery system. How do we use Keith Cunningham's Thinking Time questions to audit their technology claims and ensure we are not buying a fragile system that relies on temporary API hacks?

Question

Tyler Smith · Accepted Answer

Acquiring a company based on its technology claims is a high-risk gamble. Many firms claim to have proprietary AI engines when they are actually just running basic API connections or manual spreadsheets behind the scenes. You must perform rigorous technical due diligence to avoid paying a premium for a fragile system.

Before you finalize the acquisition terms, dedicate thirty minutes of Thinking Time to these diagnostic questions. If the external API providers change their pricing or access rules tomorrow, how will this target company's delivery model be impacted? What percentage of their automated workflows require manual human intervention to correct errors? How easily can their custom software be replicated by a competitor with a larger development budget?

Bring the answers to these questions to your leadership team during your next quarterly planning session. Use your Level 10 Meetings™ to track the progress of your technical audit and ensure your IT lead has the resources to conduct a deep-code review of the target's software.

If the target's system is built on fragile, third-party integrations with no proprietary IP, adjust your valuation accordingly. Do not pay for technology that you will have to rebuild from scratch after the acquisition.