Most technical due diligence findings don't kill a deal on their own — a missing test suite or a stale dependency is normal for a company that's been shipping fast. What actually moves a valuation or stalls a term sheet is a small set of patterns that point at concentrated, hard-to-fix risk sitting underneath the product. Knowing which findings are cosmetic and which are structural is most of the job.
Bus-factor risk concentrated in one person
A codebase where one engineer authored the majority of commits across the core service, and especially where that engineer is a founder who may not stay on post-acquisition, is one of the findings investors weigh most heavily — because it isn't fixable with money on a short timeline. Unlike a security bug, institutional knowledge can't be patched in a sprint. Diligence should quantify this directly: commit and code-ownership distribution across the team, not just headcount, and specifically whether the person with the most context is contractually committed to stay.
License exposure buried in the dependency tree
A single GPL or AGPL-licensed dependency pulled in transitively — not by a direct import, but several levels down in a dependency's own dependency tree — can force disclosure obligations on a proprietary codebase that the engineering team never noticed. This is a common and underweighted finding because it's invisible from the surface: nobody wrote import gpl_library, so nobody thought to check. A full dependency scan needs to walk the transitive tree, not just the top-level manifest.
Security findings that reveal a pattern, not an incident
One SQL injection bug in an old admin panel is a fix. The same class of bug appearing in twelve different endpoints across the codebase is a signal about how the team writes code, and that's what actually affects valuation — it implies every other endpoint deserves the same scrutiny, and that the fix isn't twelve line-changes but a process change. Diligence reports should group findings by root cause and recurrence, not just list them individually, so a reviewer can tell the difference between an incident and a pattern.
Architecture that doesn't match the growth story
A pitch built around 10x user growth paired with a single-tenant database with no sharding path, a monolith with no clear service boundaries, or synchronous processing on a path that needs to handle bursty load is a mismatch worth flagging even when nothing is currently broken. The question isn't whether the architecture works today — it's whether the remediation cost to support the stated growth plan was accounted for in the valuation at all.
Test coverage that's absent where risk is highest
Aggregate test coverage percentage is a weak signal on its own — what matters is whether coverage exists on the paths that touch money, auth, and data integrity specifically. A codebase with 60% overall coverage but none on the billing service is a materially different risk than the reverse, and a diligence report that only reports the aggregate number misses the finding that actually matters for underwriting.
What a strong diligence report does differently
It separates findings that are expensive to fix (architecture, bus factor, license exposure) from findings that are cheap to fix (a missing header, an outdated minor dependency), and it prices the expensive ones in engineer-days and dollars rather than leaving the buyer to guess. A health score without that breakdown tells an investment committee less than a shorter list of prioritized, quantified risks.
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