Assessing tech debt is basically my job these days, as I'm an architecture and infrastructure consultant for technical due diligence on acquisitions, mostly by

Assessing tech debt is basically my job these days, as I'm an architecture and infrastructure consultant for technical due diligence on acquisitions, mostly by PE firms. Some fun things you might not know from the field of technical due diligence: - Your startup is much more likely to succeed by being purchased by a private equity fund than anything else these days. Most tech acquisitions are now PE, like over 75% of big ones. (Even up to north of a billion) - The PE fund will send a diligence team. Depending on who they hire, your diligence team could be clueless consultants with checklists, or they could be real hackers who will look at your code, ask all the hard questions, and know a lot about tech debt. They will talk to you for many hours about tech debt. We typically interview for 12 hours and ask for a lot of metrics and docs. We do this for a living, so we're pretty good at sniffing out BS and knowing how to get devs to talk about their software realistically. Most devs are pretty happy to talk shop once they know we are actually developers who have been through the same process ourselves. Sometimes I feel like it's more like Developer Therapy. :-) - If you have bad tech debt, it won't necessarily sink a deal. Deals usually go through or not on other reasons, like business model revenue numbers - stuff that can't be fixed with the application of cash. However, we make a table for them of estimated cost to mitigate debt, and that can be serious cash. (i.e. X extra senior devs and QA for Y months/years) - This cash will come off the price. Or as Amazon apparently puts it... "a haircut". A haircut can easily run over a million on even a small company. So the money saved on devs for the years of accruing debt just comes off the acquisition price, but with a terrible interest rate. Also of interest: we don't actually say it's always bad. We differentiate between intentional and unintentional debt. If you accrued debt to get to market quickly and are then doubling back to attend to it reasonably, that can be a very smart decision and may actually reflect well on the assessment. On the other, debt accrued because the founders only hired interns and new grads and let them run the asylum for years does not. If I were to encapsulate in one sentence what I've learnt about tech debt in the last two years and 50 odd companies examined it would be this: nobody saves money by trying to hire mostly junior developers. Nope nope nope nope nope. If you are running a start up, you need at least a couple of six figure salary, 5+ years experience devs, and a CTO or lead architect with like 10+ years or who really, really knows their stuff. Do not cheap out on this! At a guess, I'd say it's the most obvious differentiator between the hits and the really big haircuts. That said, I only look at companies who have gotten pretty far, so the main differentiator is likely different at early VC stage. We're basically doing the first exit, and if we're talking to you, you have a successful business that some professional big time investors want in on. Hope that's of interest to some folks! :-)