Our guidance in proptech acquisition: A case study on technical due diligence

Amod Sahabandu
10 Jul, 2024

Problem statement
Insighture was approached by a prominent player in the real estate sector, with the intent to acquire a significant stake in an advanced proptech firm specialising in planning and modelling Software as a Service (SaaS) solutions. This case study outlines how Insighture's technology advisory services guided the Client through a comprehensive technical due diligence process, ultimately shaping their decision-making and strategic direction.
Services offered
Technical due diligence
We initiated the engagement by conducting a thorough technical due diligence assessment. This process encompassed a deep dive into various facets crucial to the target company’s technology landscape:
- Evaluation of the software stack, development frameworks, and underlying infrastructure to gauge scalability and compatibility with the client’s existing ecosystem.
- Assessment of the technical team’s capabilities, organisational structure, and software development methodologies to ascertain alignment with industry best practices.
- Security posture: Conducting comprehensive security scans and collaborating with specialised partners to assess the target company’s cybersecurity protocols, identifying potential vulnerabilities and risks.
- Reviewing operational workflows, IT infrastructure management practices and disaster recovery plans to ensure resilience and business continuity.
- Analysing system performance metrics, uptime records, and scalability benchmarks to determine the platform’s reliability and potential for future growth.
- Risk assessment: Identifying and evaluating risks associated with technology dependencies, regulatory compliance, and market competitiveness.
One-on-One interviews
Insighture conducted detailed interviews with key stakeholders within the proptech firm, including CTOs, technical leads, and operations managers. These interviews provided invaluable insights into the company’s strategic vision, technological roadmap, and operational challenges.
Questionnaire provision
To expedite the discovery phase and uncover potential gaps early on, we developed and administered targeted questionnaires. These questionnaires focused on critical areas such as product roadmap alignment, customer satisfaction metrics, and scalability plans.
Security scans and assessment
Employing rigorous security scanning methodologies, Insighture evaluated the proptech firm’s security posture comprehensively. This included vulnerability assessments, penetration testing, and compliance audits conducted in collaboration with trusted cybersecurity partners.
Final report delivery
The team delivered a detailed final report within agreed timeframes, consolidating findings from technical assessments, interviews, and security evaluations. The report provided the Client with a clear understanding of the proptech firm’s technology maturity, operational efficiency, and potential risks.
Outcome
Insighture’s meticulous approach to technical due diligence uncovered several critical insights that shaped the Client’s decision-making process:
1. Technology maturity gaps.
The assessment highlighted significant technology maturity gaps within the proptech firm’s infrastructure and software development practices. These gaps included outdated technology stacks, inefficient deployment processes, and scalability challenges that could hinder future growth and innovation.

2. Cost implications
Insighture’s analysis revealed substantial costs associated with upgrading and modernising the proptech firm’s technology infrastructure to achieve desired levels of maturity. These costs included investments in software redevelopment, infrastructure enhancements, and talent acquisition to strengthen technical capabilities.
3. Customer acquisition challenges
A key finding from our due diligence was the high customer acquisition costs incurred by the proptech firm. This discovery raised concerns about the scalability of their business model and the sustainability of revenue growth in the long term.
A decision not to proceed
Armed with the insights provided by Insighture’s technical advisory services, the Client made a strategic decision not to proceed with the acquisition. The identified technology maturity gaps, coupled with the high costs associated with remediation efforts and customer acquisition challenges, posed significant risks to the potential success and integration of the proptech firm within the Client’s portfolio.
Conclusion
Insighture’s role in providing comprehensive technology advisory services during this M&A process exemplifies the critical importance of rigorous technical due diligence. By the use of in-depth assessments, strategic interviews, and robust security evaluations, Insighture enabled the Client to make an informed decision aligned with their business objectives and risk tolerance.

More about the author:
Amod Sahabandu
Amod is an Associate ML Engineer at Insighture, specialising in Generative AI, LLMOps, and Computer Vision. He has extensive experience in LLM fine-tuning, prompt engineering, and building production-ready AI solutions.