IT due diligence checklist when buying or selling a business

Most share purchase agreements in Malta now hide a quiet time bomb: IT. The numbers look fine, the customer list is solid, but six months after closing you discover unsupported servers, expired licenses and a ransomware incident nobody disclosed. Fixing that can cost more than the lawyer’s bill.

This IT due diligence checklist when buying or selling a business is designed for Malta and EU SMEs. Use it to structure what to ask for, what to verify and what to push back on before you sign.

#Why IT due diligence matters when buying or selling a business

When you buy a business, you’re not just getting staff and clients. You’re inheriting:

• Every system that keeps it running
• Every past security incident
• Every compliance risk tied to data and IT

According to Eurostat, over 20% of EU enterprises reported some form of ICT security incident in recent years, and that’s just the ones willing to admit it. The IDPC in Malta has repeatedly fined companies for poor security and late breach reporting — and those liabilities don’t disappear in a share sale.

For buyers, IT due diligence protects:

• Valuation – hidden upgrade costs and security risks directly reduce what the business is truly worth
• Continuity – you avoid discovering that the business can’t operate without one person’s laptop or a single aging server
• Compliance – you understand GDPR, NIS2 or sector-specific obligations before you inherit them

For sellers, being organised on IT due diligence:

• Shortens the deal timeline
• Reduces seller warranties and indemnities you’ll be pushed to give
• Often supports a higher price, because risk is clearer and lower

A clean, well-documented IT environment doesn’t just make integration smoother — it is a negotiation asset. Buyers pay more and argue less when the risk register is short and backed by evidence.

#Key IT due diligence areas to review in an SME deal

Most professional M&A checklists now treat IT as a separate workstream alongside financial, legal and tax. For a Malta SME, your IT due diligence should cover at least these areas:

• Infrastructure & networks – servers, cloud, Wi‑Fi, VPN, remote access
• Software & SaaS – licenses, contracts, renewals, Shadow IT
• Data, backups & business continuity – where data lives, how it’s protected, how fast you can recover
• Cybersecurity & compliance – policies, incidents, GDPR, NIS2 exposure
• IT people & external suppliers – internal IT staff, managed service providers, key-person risk

This is about more than listing assets. You’re trying to answer three questions:

1. Can this business keep operating if something breaks or someone leaves?
2. What will it cost to bring IT up to a safe, modern baseline?
3. Are there any hidden bombs — legal, technical or operational — that will go off post‑acquisition?

If you haven’t looked at technology risk before, our post on The Hidden Cost of Relying on a Single IT Person shows how fragile many SMEs really are.

#IT due diligence checklist: what to request and verify

Here’s a practical checklist you can use on both buy and sell side. If you’re selling, assemble this pack before you go to market. If you’re buying, build it into your due diligence request list.

#1. Infrastructure and network

• Network diagram (even a simple one): offices, routers, switches, firewalls, VPNs
• Inventory of servers (physical and virtual), with age, warranty, role and location
• Cloud environments: Microsoft 365, Google Workspace, Azure, AWS, other hosting
• Internet links and failover: primary providers, backup lines, SLAs
• Wi‑Fi coverage and security: guest vs corporate networks, encryption, access controls

If you discover consumer-grade internet or shared hosting running core systems, that’s a red flag. Your future self will appreciate reading 5 signs your business has outgrown shared hosting before you commit.

#2. Software, SaaS and licenses

• Complete list of all software and SaaS used (including departmental tools)
• License details: type, expiry, user counts, annual cost, over/under-licensing
• Key business platforms: CRM, ERP, accounting, HR, ticketing, telephony
• Contract terms for major vendors: termination, auto‑renewal, price escalations
• Any custom-developed software: ownership, source code access, support arrangements

Shadow IT (tools paid on corporate cards but not managed by IT) is common. You’re looking for:

• Systems you didn’t know about that handle customer or employee data
• Unlicensed or pirated software
• Critical systems where ownership sits with an ex‑employee or contractor

#3. Data, backups and business continuity

• Data map: what data exists (customer, financial, HR), and where it lives
• Backup strategy: frequency, retention period, offsite/online copies, test restore evidence
• Business continuity and disaster recovery plans – even if they’re basic
• Historical downtime records: major outages in last 2–3 years, causes and fixes

Use simple economics here. We’ve covered how to calculate downtime cost in detail in How to Calculate the Real Cost of IT Downtime for a Small Business — if the target has no tested backups and no recovery plan, you’re inheriting a very expensive risk.

#4. Cybersecurity and compliance

• Security policies: password, access control, remote work, device use, BYOD
• Technical controls: firewalls, endpoint protection, email security, MFA, patching
• Incident history: breaches, ransomware, phishing, Business Email Compromise
• Regulatory exposure: GDPR, NIS2, sector rules (finance, healthcare, gaming)
• Records of DPIAs, breach notifications, audits, penetration tests

For email-related risk, read our post on Business Email Compromise — this is one of the most expensive and under‑reported attack types in M&A.

#5. IT people, vendors and support model

• IT org chart: internal staff, responsibilities, key-person dependencies
• External partners: managed IT provider, developers, specialist security firms
• Support processes: helpdesk, SLAs, out‑of‑hours coverage
• Documentation: runbooks, onboarding/offboarding procedures, configuration records

A business that “runs on Mark in IT” with no documentation is cheap for a reason. After acquisition, Mark may leave, and suddenly nobody knows how the systems work.

#Buy-side vs sell-side IT due diligence: what changes

IT due diligence looks different depending on which side of the table you sit on.

Aspect	Buyer focus	Seller focus
Objectives	Find risks, quantify upgrade costs, negotiate price and warranties	Reduce perceived risk, show control, support valuation
Time horizon	Post‑acquisition integration and 1–3 year roadmap	Getting through due diligence and handover cleanly
Documentation	Request and test evidence for every material system and claim	Organise, fill gaps, formalise undocumented practices
Messaging	Challenge assumptions, request remediation or price adjustments	Present a realistic but managed improvement plan
IT roadmap	Assess feasibility of future growth and integration	Show that planned upgrades are costed and achievable

Buyers should treat IT due diligence as a fact‑finding exercise with a costed remediation plan at the end. Sellers should treat it as a presentation exercise backed by enough reality that the buyer’s own checks don’t contradict it.

#Practical IT due diligence actions for Malta SMEs

Here’s a concise, actionable checklist you can use on your next deal.

1. Define the IT scope early Agree between buyer, seller and advisors what “IT” covers: infrastructure, cloud, security, data, key vendors. Don’t leave it as a vague annex.

2. Insist on an IT asset and system inventory For buyers: request a full list of hardware, software, SaaS and data locations. For sellers: build this before you go to market, even if it means a few weeks of internal work.

3. Map data and assess GDPR risk Identify where customer and employee data lives, who can access it, and what lawful bases and retention periods apply. Check past breach history and any IDPC interactions.

4. Review backups and test a restore Don’t accept “yes, we have backups” without proof. Ask for the last restore test date, what was restored, and how long it took. If no tests exist, budget for immediate backup modernisation.

5. Identify and cost legacy systems Flag any unsupported operating systems, old servers, custom apps nobody wants to touch, or single‑vendor lock‑ins. Estimate upgrade or replacement costs and reflect them in the price or the post‑deal IT budget.

6. Check contracts and renewals for key vendors Review SLAs, termination clauses and auto‑renewals for internet, cloud, key SaaS and managed IT partners. You don’t want to discover a 36‑month lock‑in two weeks after completion.

7. Assess IT staffing and support resilience Identify single points of failure in people. If one admin controls everything, plan either to retain them securely or move to a more structured support model such as Managed IT vs Break-Fix IT.

8. Produce a simple IT risk and remediation summary One page is enough: top 10 IT risks, their impact, likelihood, and estimated remediation cost and timeline. Buyers should use this in valuation; sellers should use it to show they understand and are addressing issues.

9. Agree post‑closing IT priorities in the SPA or integration plan For higher‑risk issues (no backups, severe security gaps), set expectations on remediation within 3–6 months after closing and who pays for what.

If you want to stop worrying about IT due diligence when buying or selling a business, get in touch — we work with Malta businesses to make IT one less thing on your list.