Due Diligence · 5 min read
Key-Person Risk in Technical Due Diligence
How lone admins, founder-engineers, and evergreen contractors hide in diligence — and how to price retention, documentation, and replacement.
Diagrams rarely show that one contractor alone deploys production. Key-person risk is priced diligence, not soft HR color.
Foundation5 assesses concentration in technical due diligence. When leadership is the bridge, outsourced CIO/CTO often covers Day-100. See the PE diligence checklist.
Where it hides
Lone Salesforce admins, founding engineers with undocumented deploys, evergreen MSPs who are de-facto IT, finance analysts who alone reconcile CRM to cash, compliance owners with no deputy. Ask who can be gone thirty days without revenue or compliance failure.
Interviews and contracts
Talk to operators without managers present. Ask who they page at 2 a.m. Compare to the org chart. Review SOW auto-renew and termination terms — cheap evergreen relationships become ransom after close.
Pricing and post-close model
Ranges: cross-training, retention, fractional leadership, replacement hires. Ignoring findings surfaces as outages during Day-100. Name deputies, require runbooks, move knowledge into CI/CD. Consider fractional CIO vs full-time.
Related reading
CRM/ERP data quality. Contact us if a deal depends on one or two people.
Practical interview agenda (90 minutes)
Spend thirty minutes with commercial leadership on where opportunities and renewals actually live. Spend thirty with finance on invoice adjustments and recognition. Spend thirty with IT on integration failures and who is paged. Cross-check answers — inconsistencies are findings.
Bring a printed system-of-record draft and force edits in the room. Ambiguity left unresolved becomes dual entry after close.
What good diligence looks like in the memo
Committees should see severity, cost ranges, thesis impact, and Day-100 owners. Soft language without numbers invites underpricing remediation. Attach sample queries and screenshots where allowed so debates stay factual.
Operators who skip these steps usually rediscover them under executive pressure. Document decisions, name owners, and revisit metrics monthly so gains compound instead of eroding with turnover. Foundation5 stays accountable to named business outcomes — coverage, forecast trust, diligence clarity, throughput — not tool checklists.
Related reading
Due Diligence · 8 min read
What PE Technical Due Diligence Should Cover Before Close
A practical PE/VC technical due diligence checklist — infrastructure risk, stack scalability, integration debt, and a clear path to post-close outcomes.
Due Diligence · 5 min read
CRM and ERP Data Quality in Technical Due Diligence
How duplicate accounts, conflicting catalogs, and integration error queues quietly break PE synergy models — and what to sample before close.
Put these ideas to work
Schedule a consultation to discuss technical due diligence for your team.