Strategic e-commerce acquisition and integration

CLIENT

E-commerce

INDUSTRY

Apparel & Clothing

SERVICE

Technical Due Diligence

About the client

Our clients, one of the leading healthcare apparel and footwear companies and, on the other side, an innovative manufacturer/distributor of school uniforms, and corporate identity uniforms in the US.

Both companies approached us with the request to conduct a technical due diligence assessment of a target company they were considering to acquire, a B2B & B2C eCommerce platform.

The Challenge & Scope of Work

Even though our client had a preexisting relationship with the target company, they wanted to ensure that post acquisition they are able to integrate easily with the platform and that the platform is scalable enough to achieve growth targets without requiring material investment. 

The Sphere team identified 4 key work streams for this assessment.

Architecture and code assessment

The buyer wanted to assess whether architecture and design of the platform are aligned with best practices, including documentation.

Performance and scalability

Identify whether there are any scalability bottlenecks and hardware dependencies that will require further investment in the future. 

New client onboarding

How automated the new client onboarding is. The buyer wanted to understand whether there are any synergies with their current client onboarding process, and whether post acquisition they can expect to realize cost savings.

Infrastructure and cloud

Hosting design and implementation of best practices. 

The Outcome

Sphere’s review showed that the target does not have very high standards for software development processes in comparison to market standard. The infrastructure and design were derived from the pre-cloud time and mostly followed the design decisions made at that time.

Technical Due Diligence confirmed that the platform can handle the current number of clients and with manual efforts it could scale to some degree. We confirmed that the client onboarding process is automated, however, the general level of technological automation was low.

Key Achievements

We identified a large amount of material improvement opportunities related to code quality. Sphere’s team has also assessed that the buyer will require a team of at least 20 FTEs.

We also identified that the system architecture and design approaches are not cloud-native. Correcting this would also require a material investment in additional headcount.

Through the Due Diligence process we revealed several high severity security vulnerabilities and one critical vulnerability, all requiring immediate attention post acquisition.

Takeaways

  • Our client decided to not go ahead with the acquisition, due to material findings outlined in the TDD report.
  • We identified that the second platform required major improvements and they decided to continue a partnership with the target instead while trying to build an in house distribution platform.