Cleaning the closet: getting your technology ready for a sale or PE investment

A client preparing for a private equity process described the work to us as “cleaning the closet.” I haven’t found a better phrase. You know roughly what’s in there. You’d just rather organize it yourself than have a stranger pull everything onto the floor with your money on the line.

If a transaction is anywhere on your horizon, a sale, a PE investment, even a serious debt raise, somebody is going to open your technology closet. Technical diligence is standard now, even for companies that don’t think of themselves as technology businesses. And the buyer’s team isn’t grading on effort. They’re pricing risk, and every risk they find has a number attached that comes out of yours.

What they’ll actually look at

Less mysterious than people fear. A diligence team wants to know roughly five things.

Whether the systems that run the business are documented and maintainable, or whether they live in two people’s heads. Whether there’s key-person risk, the developer or vendor without whom nothing ships. Whether the security posture survives a serious look, especially if you handle customer data. Whether the spend is sane, what you pay versus what you get, and what surprises hide in your contracts. And whether technology can support the growth case the deal is priced on, because if the thesis says 3x in five years, your platform has to make that believable.

None of those require perfection. Buyers expect mid-market companies to have duct tape somewhere. What kills valuations isn’t the duct tape. It’s the seller who didn’t know it was there. Surprises read as management blind spots, and blind spots reprice deals.

Why a year matters

Run the same review a buyer will run, but a year earlier, and almost everything found is fixable at normal cost. Documentation gets written. The single point of failure gets a backup. The security gaps get closed quietly. The vendor contract gets renegotiated on your timeline instead of surfacing as a liability on theirs.

Run it during diligence and the same findings become discounts, escrows, and holdbacks. The repair didn’t get cheaper. Your negotiating position did.

I think the honest framing is this: pre-transaction technology work has one of the clearest returns of anything we do, because the alternative cost is written into the purchase agreement where you can read it.

What this looks like in practice

It doesn’t take an army. The shape of the work: an experienced technology leader runs a buyer-grade assessment, you get a findings list sorted by what actually moves valuation, and then there’s a focused stretch of remediation, sometimes with our team leading it, sometimes just directing your own people and vendors. Toward the end, the same person can sit with you through diligence and answer the technical questions in the buyer’s language, which by itself changes the tone of those calls.

The goal here isn’t to dress the company up as something it isn’t. Diligence teams see through staging, and trying insults everyone’s intelligence. The goal is to walk in knowing everything they’re about to find, with the important things already fixed and a straight answer ready for the rest.

A clean closet won’t sell the company for you. It just makes sure the technology conversation adds to the price instead of subtracting from it.

Two places to start: the unwatched-spend exercise finds the line items a buyer will question first, and our case study work shows what buyer-grade remediation looks like in practice.