In transactions involving mergers & acquisitions, digital due diligence examines a target company’s technology, data, and digital operations not just from a technical perspective but also from a legal and risk perspective. The goal is to assess legal and commercial risks embedded in the target company’s digital ecosystem.
Effective digital due diligence combines legal insight with technical understanding. It involves identifying all software, platforms, databases, and digital tools critical to the target company’s operations and examining licenses, SaaS agreements, developer contracts, and vendor terms for transferability and risk allocation. It also includes an assessment of how data is collected, stored, shared, and deleted.
As businesses around the world become more digital, every transaction today carries an invisible layer of digital exposure. Therefore, identifying digital risks early and devising structuring protections accordingly is an important part of due diligence conducted in M&A transactions.