Blog SAAS How to Assess Technology in a SaaS Business Acquisition

How to Assess Technology in a SaaS Business Acquisition

The SaaS market is booming. With global SaaS revenue projected to hit $818.8 billion by 2029 at a 15% CAGR, investing in SaaS businesses is increasingly appealing for entrepreneurs and investors alike. In 2025, SaaS businesses remain highly profitable with healthy margins, making them attractive acquisition targets.

However, the true value of a SaaS business is deeply tied to its underlying technology. Understanding the software infrastructure and operations behind a SaaS company is critical when considering an acquisition. Recognizing warning signs and assessing technical robustness can save buyers from costly mistakes later.

This guide walks you through every component of a SaaS business’s technology stack, offering practical advice to evaluate system architecture, development processes, production operations, and security. By the end, you’ll be ready to conduct a thorough technical assessment before acquiring a SaaS company.

Key Components to Evaluate in a SaaS Acquisition

When buying a SaaS business, there are four core areas to focus on:

System Architecture – The backbone of the software and its scalability.
Development Methodology – How software is created, maintained, and deployed.
Production Operations – Processes and tools that ensure smooth functionality for end-users.
Security and Compliance – Measures protecting customer data and maintaining industry standards.

By systematically reviewing these areas, you gain a 360-degree understanding of a SaaS company’s technology, helping you make informed decisions.

System Architecture

System architecture encompasses the components, technologies, and infrastructure powering a SaaS platform. Evaluating this area helps you understand scalability, reliability, and future costs.

Key considerations include:

Technical Stack – Languages, frameworks, and databases powering the product.
Third-Party Integrations – Dependencies that can affect functionality or costs.
Technology-Related Hiring Costs – Expenses to maintain or expand technical teams.

Technical Stack and Infrastructure

The technical stack is the heart of any SaaS business. It includes programming languages, frameworks, databases, and infrastructure components like messaging queues or caching systems.

Why it matters:

A modern, popular stack attracts top developers and speeds up feature deployment.
Outdated or obscure technologies can make hiring talent difficult and slow product development.

Questions to Ask:

What programming languages and frameworks are used?
Are databases open-source or proprietary?
How reliable is the infrastructure?

Reliability is often expressed in terms of uptime “nines”. For example, 99.9% uptime (three nines) is common; achieving more than that can be expensive but crucial for larger operations.

Most enterprise SaaS companies benefit from cloud hosting, which enables multi-region deployment and minimal downtime. Self-hosting can reduce costs but may require internal expertise.

Questions to Ask:

Where is the software hosted?
Do uptime metrics exist, and what are they?

Hiring Costs

Post-acquisition, technical staffing costs can be significant. You’ll need to evaluate:

Payroll for in-house developers and engineers.
Outsourcing options to bridge gaps or accelerate development.
Retraining existing staff to align with new technical goals.

For context, the median salary for U.S.-based software developers is approximately $132,000 per year, highlighting the importance of budgeting for personnel.

Questions to Ask:

What does the current payroll structure look like?
Are additional hires necessary to maintain or expand the product?

Third-Party Integrations and Dependencies

Third-party tools and APIs can streamline development but carry risks.

Things to assess:

Inventory of third-party services, APIs, and libraries.
Reliability and security of external integrations.
Potential exposure to pricing changes, service discontinuations, or outages.

For instance, SaaS products reliant on AI APIs (like GPT models) face potential business risks if providers alter pricing or terms. Social media integrations and marketing tools can also add complexity and cost.

Questions to Ask:

Which third-party tools are critical to the product?
Are integrations secure, reliable, and well-documented?

Development Methodology

A SaaS company’s development methodology reflects its efficiency and product quality. Common approaches include:

Agile – Flexible, iterative development suitable for continuous improvements.
Waterfall – Structured, linear development, often used in highly regulated industries.

Key Factors to Evaluate:

Product Velocity: Speed of feature releases and updates. Slow velocity may indicate codebase issues; too rapid without quality checks can introduce bugs.
Version Control: Confirm use of systems like Git to manage code changes over time.
Feature and Issue Tracking: Examine tools and processes for managing bugs and new feature requests.

Questions to Ask:

What development methodology is used?
How frequently are new features released?
How are bugs tracked and resolved?

Production Operations

Production operations ensure a SaaS platform runs smoothly for customers. Important areas include:

System Stability & Monitoring: Check metrics like uptime, error rates, and response times (Service Level Indicators – SLIs).
Incident Management: Review recent outages or incidents affecting users.

Reliable monitoring tools and clear incident reporting can prevent customer churn and safeguard revenue.

Questions to Ask:

What monitoring tools are in place?
Have any recent outages impacted users?
Are SLIs regularly tracked and reported?

Security and Compliance

Security is non-negotiable. A SaaS acquisition should include:

Encryption: Ensure data is encrypted both at rest (databases) and in transit (TLS/SSL).
Penetration Testing: Optional but recommended for SaaS in finance, healthcare, or other sensitive industries.
Compliance: Verify adherence to regulations relevant to your industry (e.g., GDPR, HIPAA).

Questions to Ask:

How is sensitive data encrypted?
What procedures protect against breaches?
Which regulations does the company comply with?

Practical Acquisition Checklist

When assessing a SaaS acquisition, consider creating a checklist:

Technical Stack Review – Languages, frameworks, databases, infrastructure.
Third-Party Dependencies – APIs, integrations, and associated risks.
Hiring & Operational Costs – Current team, payroll, and future hiring needs.
Development Processes – Methodology, version control, feature tracking.
Production Stability – Uptime, error metrics, incident history.
Security & Compliance – Encryption, regulatory adherence, penetration testing.
Customer Impact Analysis – Review outages or incidents affecting users.

Using this checklist helps streamline due diligence and ensures no critical technical risks are overlooked.

Why Technology Due Diligence is Critical

A SaaS business is only as strong as its technology. Acquiring a company without a clear understanding of its technical foundation can lead to:

Unexpected costs – Infrastructure upgrades, hiring, or fixing code quality issues.
Customer churn – Downtime or poor software quality can alienate users.
Security risks – Breaches can damage your reputation and incur penalties.
Limited scalability – Outdated tech stacks may hinder growth.

Thorough technical due diligence maximizes ROI and protects investors from post-acquisition headaches.

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Conclusion

Acquiring a SaaS business in 2025 is an exciting opportunity — but technology assessment is non-negotiable. From system architecture and technical stacks to production operations, security, and compliance, every element must be carefully evaluated.

By systematically reviewing each component and asking the right questions, you can confidently identify potential risks, understand costs, and ensure scalability, making your acquisition a success.

When ready, platforms like Silky Road offer curated SaaS business listings, providing a wealth of opportunities to acquire a business with strong technology foundations. Thorough assessment today can secure your SaaS success tomorrow.