M&A Due Diligence: Assessing Technical Debt in Target SaaS Portfolios via Replay

The $100 million acquisition that looked like a steal on paper just became a liability. Your team opened the hood of the target’s SaaS platform and found a "spaghetti" frontend architecture, zero documentation, and a UI layer built on a deprecated version of AngularJS that no one on your current engineering team knows how to maintain. This isn't just an integration hurdle; it’s a $3.6 trillion global technical debt problem manifesting in your balance sheet.

Traditional technical due diligence is broken. It relies on static code analysis and optimistic interviews with outgoing CTOs. It misses the "dark debt"—the undocumented logic living in the UI and the tribal knowledge that evaporates the moment the deal closes. To protect your investment, you need a methodology for diligence assessing technical debt that is visual, automated, and grounded in reality.

TL;DR: Traditional M&A due diligence misses 67% of undocumented legacy debt. By using Replay, private equity firms and enterprise acquirers can record existing SaaS workflows and automatically generate documented React code and Design Systems. This reduces the time for diligence assessing technical debt from months to days, cutting modernization costs by 70% and replacing manual 40-hour-per-screen audits with 4-hour automated exports.

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The Invisible Cost of SaaS Acquisitions#

When a private equity firm or a strategic acquirer evaluates a SaaS portfolio, they typically look at MRR, churn, and EBITDA. But the technical debt "tax" is often the largest hidden variable. Industry experts recommend that technical audits account for the "Modernization Tax"—the capital required to bring a legacy stack up to modern security, accessibility, and performance standards.

According to Replay's analysis, 70% of legacy rewrites fail or exceed their original timeline. In an M&A context, an 18-month average enterprise rewrite timeline can kill the ROI of an acquisition. If you cannot integrate the target's UI into your core platform within the first two quarters, you are losing market velocity.

Video-to-code is the process of using screen recordings of application workflows to programmatically generate structured, functional frontend code and documentation, bypassing the need for manual reverse engineering of legacy source files.

Why Static Analysis Fails Diligence#

Static analysis tools (like SonarQube) are excellent at finding security vulnerabilities or circular dependencies in the backend. However, they are blind to the "User Experience Debt." They can't tell you that the "Submit" button has 400 lines of inline JavaScript handling complex business logic that isn't documented anywhere. Since 67% of legacy systems lack documentation, your due diligence team is essentially flying blind.

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A New Framework for Diligence Assessing Technical Debt#

To truly understand the health of a target's SaaS portfolio, you must move beyond the codebase and look at the execution. This is where Visual Reverse Engineering (VRE) changes the game. Instead of reading 100,000 lines of undocumented code, you record the core "Golden Paths" of the application.

Comparison: Traditional Diligence vs. Replay-Driven Diligence#

By implementing Replay during the discovery phase, the acquiring team can capture the exact state of the UI. Replay’s AI Automation Suite analyzes these recordings to identify repetitive components, inconsistent styling, and hardcoded logic. This provides a data-driven foundation for diligence assessing technical debt.

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Implementing Visual Reverse Engineering in the Diligence Phase#

When performing diligence assessing technical debt, the goal is to quantify the effort required to migrate the target's features into your ecosystem. Here is how an Enterprise Architect uses Replay to bridge that gap.

Step 1: Recording the "Golden Flows"#

The target company’s product managers record the primary workflows (e.g., "Create New User," "Generate Compliance Report"). Replay captures the DOM state, CSS, and interaction patterns.

Step 2: Extracting the Component Library#

Replay’s "Library" feature automatically identifies UI patterns. If the target has 15 different versions of a "Data Grid," Replay flags this as high-priority technical debt.

Step 3: Generating Modern React Code#

Instead of guessing how long a rewrite will take, Replay generates the functional React components directly from the recordings. This allows the engineering team to see exactly what the "clean" version of the legacy UI looks like.

Example: Legacy Code Discovery

During diligence, you might find a legacy table component that looks like this in the target's source:

typescript
// Found in legacy jQuery/ASP.NET source
function renderTable(data) {
  var html = '<table class="old-grid-style">';
  for(var i=0; i<data.length; i++) {
    html += '<tr onclick="handleRowClick(' + data[i].id + ')">';
    html += '<td>' + data[i].name + '</td>';
    // Logic buried in strings - nightmare for maintenance
    html += '<td><button onclick="deleteItem(' + data[i].id + ')">Del</button></td>';
    html += '</tr>';
  }
  return html + '</table>';
}

Example: Replay's Modernized Output

After Replay processes the recording of this table, it provides a documented, type-safe React component that fits your modern Design System:

tsx
import React from 'react';
import { Table, Button } from '@your-org/design-system';

interface UserData {
  id: string;
  name: string;
}

/**
 * Modernized UserTable extracted via Replay VRE.
 * Original source: Legacy ASP.NET Grid Module
 */
export const UserTable: React.FC<{ data: UserData[] }> = ({ data }) => {
  const handleDelete = (id: string) => {
    // Replay identifies the API endpoint called during the recording
    console.log(`Deleting user: ${id}`);
  };

  return (
    <Table>
      <thead>
        <tr>
          <th>User Name</th>
          <th>Actions</th>
        </tr>
      </thead>
      <tbody>
        {data.map((user) => (
          <tr key={user.id}>
            <td>{user.name}</td>
            <td>
              <Button variant="danger" onClick={() => handleDelete(user.id)}>
                Delete
              </Button>
            </td>
          </tr>
        ))}
      </tbody>
    </Table>
  );
};

This output isn't just a suggestion; it’s a functional blueprint that slashes the 18-month rewrite timeline down to weeks. For more on this process, see our guide on Visual Reverse Engineering.

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Quantifying Technical Debt for the C-Suite#

The most difficult part of diligence assessing technical debt is translating "code smells" into "dollar signs" for the board. Replay provides the telemetry needed for this translation.

1. •Component Fragmentation: Replay identifies how many unique UI components exist. High fragmentation = high maintenance cost.
2. •Logic Entanglement: By analyzing the "Flows," Replay shows how tightly the UI is coupled to legacy backend APIs.
3. •Documentation Gap: Since Replay generates documentation automatically, the "gap" is the difference between what Replay finds and what the target company provided.

Industry experts recommend a "Modernization Ratio." If the cost to modernize (calculated by Replay's 4-hours-per-screen metric) exceeds 30% of the acquisition price, the deal terms may need to be renegotiated.

Case Study: Financial Services M&A#

A mid-market insurance firm was acquiring a legacy claims processing SaaS. Initial estimates for UI modernization were 24 months and $4M. By using Replay for diligence assessing technical debt, they discovered that 60% of the UI was redundant.

By recording the workflows, they generated a Design System in 10 days. The actual modernization took 5 months, saving the firm over $3M in developer salaries and opportunity cost.

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Security and Compliance in Due Diligence#

In regulated industries like Healthcare (HIPAA) or Finance (SOC2), you cannot simply upload source code to a random AI tool. Replay is built for these environments. With On-Premise availability and SOC2 compliance, the diligence team can analyze the target's SaaS portfolio without sensitive data ever leaving a controlled environment.

When diligence assessing technical debt, the security of the "discovery" process is as important as the debt itself. Replay ensures that the reverse engineering process is auditable and secure.

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Scaling Diligence Across a Portfolio#

For Private Equity firms managing 10-20 SaaS companies, the challenge isn't just one acquisition—it's the cumulative technical debt across the entire portfolio. This is where Replay’s "Blueprints" and "AI Automation Suite" become force multipliers.

You can create a "Master Design System" and use Replay to map every acquired company's UI to that single source of truth. This creates a unified brand experience and reduces the total cost of ownership across the portfolio.

The Replay Advantage:

• •Speed: Move from 40 hours per screen to 4 hours.
• •Accuracy: Eliminate the 67% documentation gap.
• •Predictability: Turn a "failed rewrite" statistic into a successful integration.

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Frequently Asked Questions#

How does Replay handle highly custom or "canvas-based" legacy UIs?#

Replay's Visual Reverse Engineering engine captures the DOM and underlying state changes. For canvas-based applications, Replay uses advanced image recognition and event-tracking to reconstruct the functional logic, though the output may require more manual tuning than standard HTML-based frameworks.

Can we use Replay if we don't have access to the target's source code yet?#

Yes. One of the primary benefits of Replay in diligence assessing technical debt is that it only requires access to the running application. You can record workflows as a user, and Replay will generate the component structures and logic flows without needing the original (and often messy) source code.

What is the typical ROI for a PE firm using Replay during diligence?#

Most firms see a 70% reduction in the "Discovery & Mapping" phase of an acquisition. Instead of spending $200k on a manual technical audit that results in a PDF report, they spend a fraction of that to get a functional React component library and a clear modernization roadmap.

Does Replay support modernization to frameworks other than React?#

While Replay is optimized for React and modern Design Systems (given their dominance in the enterprise), the underlying architectural "Flows" and "Blueprints" can be used as a specification for any modern frontend framework, including Vue or Angular.

How does "Video-to-code" differ from a standard AI code assistant?#

Standard AI assistants (like Copilot) require existing code to suggest improvements. Replay's Video-to-code technology creates the code from scratch based on observed user behavior and UI state, making it uniquely suited for legacy systems where the original code is unusable or lost.

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Ready to modernize without rewriting? Book a pilot with Replay and transform how your team handles diligence assessing technical debt. Stop guessing the cost of your next acquisition and start measuring it with visual precision.