Product Due Diligence: What It Is and How to Do It Right

TL;DR — Product Due Diligence in 60 Seconds

• The stakes are high: 70-75% of M&A deals fail, often due to inadequate due diligence
• 5 critical areas to evaluate: Product Team, Vision & Strategy, Engineering Processes, Technical Infrastructure, and Organizational Structure
• Tech DD is now essential: Technical issues can reduce startup valuations by 20% or delay funding by 6 months
• Use DORA metrics: Deployment frequency, lead time, change failure rate, and recovery time reveal engineering health
• Evaluate together: Product and engineering share processes — VCs know this and assess both as one system

A rigorous analysis of 40,000 acquisitions worldwide over 40 years found that 70-75% of acquisitions fail. The research, conducted by professors Baruch Lev (NYU Stern) and Feng Gu (University at Buffalo), points to one consistent culprit: inadequate due diligence.

Product due diligence is the systematic evaluation of a company's product organization, technology, and processes before an investment, acquisition, or leadership hire. It goes beyond financial audits to examine whether a product team can actually deliver on the company's promises.

Whether you're a VC evaluating a startup, a buyer considering an acquisition, or a leader joining a new company, understanding product due diligence can mean the difference between success and becoming another failure statistic.

In this article, I'll take you through the 5 key areas of product due diligence:

1. The Product Team & processes
2. Product vision, strategy, roadmap, & current state
3. Engineering Team & processes
4. Technical due diligence — why VCs care about engineering processes
5. Organizational structure & collaboration

1. Product Team Due Diligence

The success of a product depends on the team building it. Evaluating a Product Team isn't easy — it requires looking at both individual capabilities and how the team functions as a unit.

"The best ideas come from the people that are doing the work." — Ryan Sousa, ex-Amazon

For Product Leads, the focus should be on strategy and team empowerment. Product Managers work closely with their teams and own their product or business domain. In both cases, I always check to ensure the whole team works together and understands their craft.

Product Team Organization & Communication

Many organizations struggle with prioritization. The reason is simple: they lack strategic alignment. That's why I always evaluate the communication and processes of the Product Team:

• How often and in which ways do they communicate?
  • Do they have weekly or bi-weekly strategy/priority meetings?
• What does their product discovery process look like?
• How do they plan and build products?
  • How do they collect and evaluate data?
  • Do they understand their customer's problems — and where is this documented?
• What practices and methodologies do they follow — and why?

Note: This list isn't exhaustive. Product Management is the foundation of any organization, making evaluation both complicated and complex.

The CPO/Product Lead Role

In some companies, the CEO or CTO also serves as CPO. This can work for smaller organizations. However, once the product and engineering org grows beyond 40 people, I recommend having a dedicated full-time Product Lead.

Key questions for evaluating Product Leaders:

• Do they know the product strategy inside and out?
  • Do they understand the market and business domain?
  • When was the strategy last updated?
• What's their leadership style?
  • Are they effective communicators and coaches?
  • Do they hold regular 1:1s with team members?
• How are they perceived by their team and the rest of the company?
• Does the Product Lead have a proven track record as a Product Manager?

Product Manager Skillset Assessment

The PM role varies by company, but certain patterns persist. Some PMs work closely with teams (often called Product Owners), while others focus on market and business understanding. Many do both.

Beyond identifying strengths, I examine their working documents — backlogs, roadmaps, and strategies:

• What are their individual strengths and weaknesses across technical, business, data, and research domains?
• How do they plan, roll out, and announce feature releases?
• What's the quality of their backlogs, epics, and user stories?
  • Does the backlog reflect current business goals and strategy?
  • Do items clearly highlight customer and business value?
• Do they work with an agile framework?
• How do they collect and store customer and stakeholder feedback?

Product Design Due Diligence

Product Management and Design belong together. A critical part of evaluation is understanding how Design Teams work and integrate into the product organization:

• What does the design org chart look like?
  • Does design have a seat at the leadership table?
• Do they understand their users and personas?
  • How often do they conduct user interviews?
• What are their design guidelines?
  • Do they use a design system?
  • How do they collaborate with branding and marketing?

Too often I've seen Product and Design teams working independently. This is usually a sign of missing communication and alignment.

2. Product Vision & Strategy Due Diligence

The product itself must be validated — not just by examining competition or interviewing the Product Team. You need to determine whether the product has the potential to:

• Solve additional problems beyond current scope
• Scale and grow faster
• Achieve or maintain product-market fit
• Become profitable (if not already)
• Remain viable and sellable in the future

"Strategy by definition is choosing what not to do." — Christian Idiodi, SVPG

I've written detailed guides on how to define a product vision and develop a vision-based product strategy. Unfortunately, many companies still operate without them. That's why helping teams align on what matters most is a core part of my work.

Strategy & Vision Evaluation Checklist

When evaluating an existing vision and strategy, I examine:

• What are the current products and services?
• What problem does each solve — and for whom?
• What's the pricing model?
• How does the product perform? (KPIs, Sales, P&L, CAC, NPS)
• What is the product vision — and why this vision?
• What does the product strategy include? (timeframe, market research, competition analysis, financial projections)
• What's on the roadmap for the upcoming months?
  • What are the biggest unknowns and uncertainties?
  • When was the last product or feature launch?

"I don't sleep well if I don't base my strategy and bets on data." — Konrad Heimpel, GetSafe

It's not enough to verify that a vision and strategy exist. I always check whether people actually use them in day-to-day decision-making. The best strategies are worthless if no one follows them.

3. Engineering Team & Processes Due Diligence

The Engineering Team structure and development processes have a significant impact on both the product and the Product Team. By examining team setup and frameworks, I can understand how they work and function together.

Engineering Process Evaluation

• Which agile frameworks or methodologies do they use?
  • What does the team structure look like?
• How often do they ship to production?
  • What's the average feature and deployment lead time?
  • What's the average velocity or throughput?
  • Which environments do they deploy to?
• How do they QA the product?
  • What's the test coverage?
• How do they handle incidents?
  • What are the SLAs and SLOs?
  • Do they have an on-call rotation?

Understanding the collaboration between product and engineering is critical. I assess whether they work as a team with a healthy relationship. An Engineering Team that clearly understands the problems they're solving will build better solutions. Without the "why," they can't succeed — and providing that context is the Product Team's job.

If the product vision and strategy aren't clear, the Engineering Team will suffer.

4. Technical Due Diligence — Why VCs Care About Engineering Processes

Product and engineering share a process while building products — and VCs know it. That's why due diligence must evaluate both together.

Technical due diligence has evolved from a compliance checkbox to a primary driver of acquisition value. According to research from OStride Labs, 70% of startups waste significant resources rebuilding improperly architected code. Technical issues discovered during due diligence can reduce a startup's valuation by 20% or delay funding by 6 months.

"Show me your backlog and I show you your future."

The 5 Areas VCs Evaluate in Tech Due Diligence

1. Architecture & Scalability
Can the system handle 10-100x growth without a complete redesign? Investors examine whether the architecture has a clear decomposition pathway or if it's a monolith that will become a liability.

2. Technology Stack Decisions
What's the rationale behind framework choices? Is talent available for these technologies? Exotic stacks can create hiring bottlenecks and maintenance nightmares.

3. Technical Debt & Code Quality
What percentage of development time goes to managing unstable code versus building new features? Case studies show that some startups spend 40% of engineering time just keeping legacy code functional.

4. Infrastructure & DevOps
Are there CI/CD pipelines? Monitoring systems? Disaster recovery capabilities? Manual deployment processes without automation are a major red flag.

5. Team Capabilities & Key Person Risk
Is critical knowledge concentrated in single developers? If one person leaves, does the company lose the ability to maintain core systems?

DORA Metrics for Engineering Health

The DevOps Research and Assessment (DORA) team — founded by Gene Kim, Jez Humble, and Nicole Forsgren — analyzed over 31,000 professionals across six years to identify four key metrics that predict engineering performance:

• Deployment Frequency: How often does the team ship to production? Elite teams deploy multiple times per day.
• Lead Time for Changes: How long from code commit to production? High performers measure this in hours, not weeks.
• Change Failure Rate: What percentage of deployments cause production failures? Elite teams stay below 15%.
• Mean Time to Recovery (MTTR): How quickly can the team recover from incidents? Top performers resolve issues within one hour.

During due diligence, ask for these metrics. If a company can't provide them, that's telling. If they can — and the numbers are poor — you've identified a risk that needs addressing post-acquisition.

The Product-Engineering Connection

Here's what most due diligence frameworks miss: product and engineering processes are deeply intertwined. The discovery-to-delivery flow connects both teams at every stage:

• Discovery: Product identifies problems; Engineering assesses feasibility
• Definition: Product writes requirements; Engineering estimates complexity
• Development: Engineers build; Product validates against user needs
• Delivery: Engineering deploys; Product measures outcomes

Evaluating only one side gives you an incomplete picture. A brilliant product strategy means nothing if engineering can't execute it. Conversely, a capable engineering team is wasted if product can't provide clear direction.

Tech Due Diligence Red Flags

Watch for these warning signs during technical assessment:

• Monolithic architecture without any decomposition pathway
• Manual deployments lacking automation
• Critical knowledge concentrated in single developers
• Absence of monitoring or performance metrics
• No documentation of architectural decisions
• Heavy reliance on outdated or unsupported technologies

Real-World Case Studies

Fintech Scaling Failure: A promising fintech startup had secured conditional investment of $3M. During technical due diligence, investors discovered that the database architecture couldn't handle more than a few hundred concurrent users. Result: investment delayed six months, valuation reduced by 20% while the team rebuilt core infrastructure.

EdTech Technical Burden: An EdTech company's technical review revealed that 40% of development time was spent managing an increasingly unstable codebase with minimal test coverage. CTOs estimated 6-8 months of engineering time needed to address technical debt with minimal feature development during that period.

These aren't edge cases. According to the same OStride Labs research, 40% of startups lose initial customers due to performance problems that proper technical due diligence would have uncovered.

5. Organizational Structure & Collaboration

The Product Team serves as the interface to all other departments. That's why I examine how the entire organization functions and interacts with product.

• How are key stakeholder departments organized?
• How do they collaborate with product? (Marketing, BizDev, Sales, Support)
  • What do processes and structures in other departments look like?
• What are their high-level strategies?
  • Is the Product Team aware of them?
• What do they need from product and engineering that they're not getting?

Why does organizational structure matter for product due diligence?

The quality of relationships determines the quality of communication. Strong communication dramatically increases the likelihood of success. A common mistake among Senior Management Teams is underestimating the power of alignment. That's why I focus on observing how people interact across departments.

No matter how thoroughly you analyze a product or team, you're ultimately evaluating humans and their work. Emotional intelligence helps you see behind the scenes and understand the bigger picture.

Getting Product Due Diligence Right

With 70-75% of acquisitions failing, thorough product due diligence isn't optional — it's essential. The five areas covered in this guide provide a comprehensive framework for evaluation:

1. Product Team: Assess capabilities, processes, and alignment
2. Vision & Strategy: Verify they exist and are actually followed
3. Engineering Processes: Evaluate how work gets done
4. Technical Infrastructure: Use DORA metrics and identify risks
5. Organizational Structure: Understand cross-functional dynamics

The key insight is that product and engineering must be evaluated together. They share processes, dependencies, and outcomes. Assessing one without the other gives you an incomplete — and potentially misleading — picture.

How do you approach product due diligence in your organization? Let's discuss on LinkedIn.