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Building a platform through acquisitions?
Find out whether the technology can carry the thesis.
Industries
Tech-Enabled Services
Is it a software business or a services business with software? We’ll tell you.
Diligence of tech-enabled services companies, including roll-ups and add-on acquisitions.
Tech-enabled services companies are often valued on the strength of their platform. The question for a buyer is how much of the work the platform really does, and how much is people filling the gaps. We assess the systems, data, and teams behind service delivery, and whether technology will let margins expand as the business grows, or whether headcount will grow with every new customer.
What we find most often in tech-enabled services deals
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Manual work behind the platform.
Operations teams re-keying data, running spreadsheets, or fixing exceptions that the software was supposed to handle. The best teams prioritize by staff time saved, a direct line to labor cost; we assess whether that is happening.
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Replacing a core vendor system.
Plans to retire an off-the-shelf system (an EMR, practice management, or billing platform) in favor of custom software, while unsupported integrations to it can break at any time. We assess the replacement timeline, the gaps not yet designed (such as claims or billing), and the risk during the transition.
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Product and IT run as one team.
The customer-facing platform and internal business systems share one team and one budget, so neither gets the focus it needs. AKF’s view is that product technology and IT should be separate; we assess what separating them would take.
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Integration debt from acquisitions.
Prior add-ons still running on separate systems, blocking the synergies in the roll-up thesis.
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Platform ownership questions.
Core software built by contractors or licensed from a third party, with unclear IP rights or no in-house team able to change it.
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Informal delivery practices.
Few coding standards, little automated testing, and work tracked in several places, which raises quality risk as the platform takes on more of the business.
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Key-person dependency.
A small team with shared roles, sometimes one person, holding the system together, and disaster recovery steps that have never been documented or practiced.