Digital Due Diligence

Digital business models cannot be assessed on the basis of historical financial metrics alone. Their viability depends on the scalability of technological structures, the quality of data-driven value-creation processes and the ability to remain strategically capable of acting in an AI-driven competitive environment. For investors, this means: digital performance capability, governance and scalability must be examined just as critically as financial metrics.

Context and relevance

Assessing digital business models requires a multidimensional perspective. Market position, technological maturity and organisational capabilities together determine whether a company is able to realise digital growth potential in practice. FOSTEC & Company combines structured advisory methodology with AI-supported analytical procedures and thereby delivers a differentiated picture of the market, business-model and technology perspectives (Figure 1: FOSTEC & Company unites three central perspectives of digital value creation).

Figure 1: FOSTEC & Company unites three central perspectives of digital value creation

Our approach

On the basis of a clearly defined analytical framework (Figure 2: Core aspects of the digital due diligence assessment), FOSTEC & Company examines all relevant digital and technological value drivers. The following areas of analysis form the core of the digital due diligence:

1. Digital maturity score
   • Assessment of the digital strategy and the management of digital initiatives
   • Analysis of efficiency, end-to-end digitalisation and degree of automation
   • Assessment of digital competencies, responsibilities and internal capabilities
   • Assessment of openness to innovation, data culture and the organisation’s digital maturity

2. Competitive digital benchmarking
   • Analysis of e-commerce performance and central KPIs
   • Assessment of customer journey and UX along digital touchpoints, usability and on-site optimisation
   • Assessment of omnichannel capability with regard to the integration of online and offline as well as channel integration
   • Assessment of marketing and traffic competencies in the areas of SEO/SEA, social media and marketing technology

3. Tech-stack quality
   • Analysis of architecture and systems in terms of modernity, modularity, integration capability and technical debt
   • Assessment of software quality and development processes
   • Analysis of the data and analytics infrastructure
   • Assessment of security and compliance

4. Digital Growth Potential
   • Analysis of the scalability of digital business models
   • Market and trend analysis with a focus on structural growth drivers
   • Assessment of untapped value-creation potential, for example through new channels, markets or product features
   • Evaluation of the future viability of existing systems and structures

Figure 2: Core aspects of the digital due diligence assessment

Results and impact

FOSTEC & Company’s integrated approach produces a holistic, analytically robust basis for decision-making. Clients receive a structured overall assessment of the company’s digital performance capability: strengths and weaknesses in the commerce setup are quantified, the quality and scalability of the tech stack are assessed, and digital growth potential is realistically positioned. The analysis includes a robust assessment of AI integration capability. Investors thereby gain a fact-based foundation for weighting risks precisely, assessing potential realistically and forming a well-founded judgement of the target’s future viability in a digital market environment.

Position within the service portfolio

The portfolio of due diligence services comprises offerings of varying scope and focus. FOSTEC & Company provides 360-degree due diligence services for the analysis of all business aspects:

• Commercial Due Diligence
• Digital & E-Business Model Due Diligence
• Technology, Data & AI Due Diligence
• Organization & Talent Due Diligence
• Merger & Acquisition (M&A) Advisory
• Value Creation & Exit Readiness
• Carve-out & Post-Merger Integration

Let us assess in an introductory conversation which digital fields of action and risk drivers are relevant to your transaction – data-based, pragmatic and with clear, actionable recommendations.