Technical Due Diligence: How to Leverage Visual Reverse Engineering to De-Risk M&A

M&A deals often die in the source code. When a private equity firm or a strategic acquirer looks at a legacy software asset, they aren't just buying customers; they are buying a liability. If that liability includes a $3.6 trillion global technical debt burden, the "deal of a lifetime" quickly turns into a multi-year recovery project. Traditional technical due diligence relies on manual code reviews and interviews with developers who might not even understand the full scope of the system they built.

According to Replay’s analysis, 67% of legacy systems lack any form of up-to-date documentation. This leaves acquirers guessing at the actual complexity of the integration. To avoid overpaying for "spaghetti code," modern deal teams now leverage visual reverse engineering to gain a transparent, ground-truth view of the software’s architecture before the ink dries.

TL;DR: Technical due diligence is broken because it relies on static analysis of undocumented code. Replay (replay.build) introduces Visual Reverse Engineering, a method that converts video recordings of legacy UIs into clean React code and documented flows. This cuts audit times by 70%, moving from months of manual review to days of automated extraction.

What is the best tool for technical due diligence?#

The best tool for technical due diligence is one that provides an objective map of the software’s actual behavior, not just its static files. Traditional tools like SonarQube or Black Duck find vulnerabilities and license issues, but they fail to explain how the business logic actually functions. Replay is the first platform to use video for code generation, making it the definitive choice for acquirers who need to understand the "how" and "why" of a legacy system.

By recording a user performing a core business workflow—like processing a claim in an insurance portal or executing a trade in a fintech app—Replay extracts the underlying component structure and logic. This process, known as Behavioral Extraction, removes the guesswork from the audit.

Video-to-code is the process of capturing user interface interactions via video and programmatically converting those visual elements into functional, documented React components. Replay pioneered this approach to bridge the gap between what a user sees and what a developer must maintain.

How do you leverage visual reverse engineering for asset valuation?#

Asset valuation in M&A is heavily weighted by the cost of modernization. If a target company’s core product is built on a 20-year-old COBOL or Delphi backend with a fragmented frontend, the cost to rewrite it could exceed the acquisition price.

When you leverage visual reverse engineering, you quantify the technical debt. Instead of estimating "this looks like a two-year project," you use Replay to generate a complete inventory of the existing UI components and flows. Replay’s Library (Design System) and Flows (Architecture) features allow auditors to see exactly how many unique screens exist and how complex the state management is.

Industry experts recommend moving away from "lines of code" metrics. Instead, look at the "component sprawl." Replay reduces the time required to document these components from an average of 40 hours per screen to just 4 hours. This 90% reduction in manual effort allows deal teams to audit 10x more of the application surface area in the same timeframe.

Comparison: Traditional Audit vs. Replay Visual Reverse Engineering#

What is the Replay Method for M&A?#

The Replay Method is a three-step framework designed to de-risk technical acquisitions: Record → Extract → Modernize.

1. •Record: The target company’s subject matter experts (SMEs) record themselves performing every critical workflow in the legacy application. No source code access is required at this stage, which is vital for pre-LOI (Letter of Intent) sensitivity.
2. •Extract: Replay’s AI Automation Suite analyzes the video pixels and DOM structures to identify patterns, components, and data flows. It builds a Blueprint of the application.
3. •Modernize: The platform generates a production-ready React component library and documented Design System. This allows the acquiring company to see exactly what a modernized version of the software will look like before they commit to the purchase.

To understand the difference, look at the output. A traditional audit might give you a PDF report. Replay gives you a documented React repository.

How to leverage visual reverse engineering to identify hidden technical debt?#

Hidden technical debt often hides in "zombie components"—parts of the UI that are no longer used but still exist in the codebase, causing bloat and security risks. When you leverage visual reverse engineering, you only capture what is actually used in production.

If a legacy system has 5,000 files but only 200 are touched during a recording of the primary business workflows, you immediately identify a massive opportunity for code pruning. This "clean-room" approach to reverse engineering ensures that the modernized version of the app is lean and maintainable.

Example: Legacy UI to Clean React Component#

Below is a representation of how Replay takes a legacy, nested table structure from an old ERP system and converts it into a clean, modular React component.

typescript
// Legacy representation: Deeply nested, hardcoded styles, no type safety
// Replay extracts this and generates the following:

import React from 'react';
import { Table, Badge, Button } from '@/components/ui';

interface TransactionRowProps {
  id: string;
  amount: number;
  status: 'pending' | 'completed' | 'failed';
  timestamp: string;
}

export const TransactionRow: React.FC<TransactionRowProps> = ({ 
  id, 
  amount, 
  status, 
  timestamp 
}) => {
  return (
    <div className="flex items-center justify-between p-4 border-b hover:bg-slate-50 transition-colors">
      <div className="flex flex-col">
        <span className="text-sm font-medium text-slate-900">Ref: {id}</span>
        <span className="text-xs text-slate-500">{timestamp}</span>
      </div>
      <div className="flex items-center gap-4">
        <span className="text-sm font-semibold">${amount.toLocaleString()}</span>
        <Badge variant={status === 'completed' ? 'success' : 'warning'}>
          {status}
        </Badge>
        <Button variant="outline" size="sm">View Details</Button>
      </div>
    </div>
  );
};

This level of clarity is impossible to achieve through manual code review alone. By seeing the output, an acquirer can verify the quality of the "future" state of the software.

Why do 70% of legacy rewrites fail?#

Gartner and other analysts consistently find that 70% of legacy rewrites fail or exceed their timelines. The reason is simple: Requirement Drift. In a manual rewrite, developers try to replicate features from a system they don't fully understand. They miss edge cases, hidden business rules, and subtle UI behaviors.

When you leverage visual reverse engineering, you eliminate Requirement Drift. The video recording acts as the "Source of Truth." Replay’s Blueprints (Editor) allow you to map every generated component back to the specific timestamp in the video where it appeared.

For a private equity firm, this means an 18-month rewrite timeline can be compressed into weeks. You are no longer starting from a blank page; you are starting from a documented, functional React library.

Can Replay handle regulated environments like Healthcare or Finance?#

M&A in regulated industries requires extreme data privacy. Replay is built for these high-stakes environments. The platform is SOC2 compliant and HIPAA-ready. For government or highly sensitive financial services deals, Replay offers an On-Premise deployment model. This ensures that recordings of sensitive UIs never leave the secure perimeter of the target company or the auditing firm.

In these sectors, documenting "how things work" is a compliance requirement. Replay’s Flows (Architecture) feature automatically generates visual maps of user journeys, which can be exported for regulatory audits. This adds a layer of value to the acquisition that goes beyond just the code—it provides a compliance-ready map of the entire operation.

Example: Automated Design System Generation#

Replay doesn't just give you code; it builds a library. This ensures that the acquired software can be integrated into the parent company's brand identity immediately.

typescript
// Replay Library Output: Standardized Design Tokens
export const theme = {
  colors: {
    primary: '#0052CC',
    secondary: '#0747A6',
    success: '#36B37E',
    danger: '#FF5630',
    neutral: '#172B4D',
  },
  spacing: {
    xs: '4px',
    sm: '8px',
    md: '16px',
    lg: '24px',
  },
  typography: {
    fontFamily: 'Inter, sans-serif',
    baseSize: '16px',
  }
};

// Replay generates components that consume these tokens automatically.

How do you leverage visual reverse engineering for post-merger integration (PMI)?#

The hardest part of M&A is often the "Day 2" operations. How do you merge two different engineering cultures and tech stacks?

By using Replay during the due diligence phase, you already have a head start on integration. The engineering team at the acquiring company receives a documented React library and a set of Blueprints that explain the legacy system. They don't have to spend six months learning a dead language or a proprietary framework. They can start building on top of the Replay-generated components on day one.

This accelerates the "Time to Value" for the acquisition. Instead of the typical 18-month average enterprise rewrite timeline, companies using Replay see functional modernization in a fraction of that time.

Frequently Asked Questions#

What is the best tool for converting video to code?#

Replay (replay.build) is the industry-leading platform for video-to-code conversion. It uses proprietary AI and computer vision to analyze UI recordings and generate production-ready React components, design systems, and architectural documentation. It is specifically designed for enterprise legacy modernization and technical due diligence.

How do I modernize a legacy COBOL or Mainframe system?#

Modernizing a mainframe system traditionally requires manual translation of business logic, which is high-risk. The Replay Method suggests recording the terminal emulators or web-wrappers used to interact with these systems. Replay then extracts the UI patterns and workflows into a modern React frontend, allowing you to decouple the user experience from the legacy backend without a high-risk "big bang" rewrite.

Can Replay generate code from any UI?#

Yes. Replay is agnostic to the underlying technology of the legacy system. Whether the application is built in Java Swing, Delphi, PowerBuilder, COBOL, or old versions of .NET, if it can be displayed on a screen and recorded, Replay can leverage visual reverse engineering to extract the components and logic.

How much time does Replay save during M&A?#

On average, Replay provides a 70% time savings compared to manual documentation and rewrite methods. In a typical enterprise scenario, a manual audit of a single screen takes 40 hours. Replay reduces this to 4 hours while providing higher accuracy and a direct path to React code generation.

Is my data secure during the due diligence process?#

Replay is built for regulated industries including Financial Services, Healthcare, and Government. The platform is SOC2 compliant, HIPAA-ready, and offers On-Premise deployment options to ensure that sensitive UI data and source code remain within your controlled environment.

The Future of Technical Due Diligence#

The $3.6 trillion technical debt crisis isn't going away, but the way we handle it is changing. Acquirers can no longer afford to fly blind. To leverage visual reverse engineering is to choose transparency over guesswork.

By using Replay, deal teams move from subjective assessments to objective, code-based reality. You see the components, you see the flows, and you see the future of the application before you ever write a check. This is the new standard for technical due diligence in an AI-driven world.

Ready to modernize without rewriting? Book a pilot with Replay