Technical Due Diligence in M&A: Uncovering Legacy Risks via Visual Mapping

Acquiring a company for its technology without performing deep-tissue technical due diligence is like buying a house based on a Polaroid of the front door. You see the facade, but you have no idea if the foundation is crumbling or if the wiring is a fire hazard. In the world of M&A, that "fire hazard" is $3.6 trillion in global technical debt, and it’s the primary reason 70% of legacy rewrites and integrations fail to meet their ROI targets.

Traditional technical due diligence is broken. It relies on interviews with outgoing architects who have a vested interest in the deal closing, or "code archaeology"—a manual process where senior engineers spend weeks digging through undocumented repositories. With 67% of legacy systems lacking any meaningful documentation, you aren't performing an audit; you're performing a seance.

TL;DR: Visual reverse engineering transforms technical due diligence from a subjective manual audit into an automated, data-driven assessment that uncovers hidden legacy risks in days rather than months.

The High Cost of Undocumented Legacy Systems#

When a private equity firm or a strategic acquirer looks at a target’s tech stack, they often see a "black box." The UI looks functional, but the business logic is trapped in monolithic architectures, outdated frameworks, or spaghetti code that hasn't been touched in a decade.

The risk isn't just that the code is "old." The risk is the Knowledge Gap. If the original developers have left, or if the system has evolved through years of hotfixes, no one actually knows how the data flows from the screen to the database. This is where the 18-24 month "Big Bang" rewrite trap begins—a timeline that 70% of enterprise projects exceed.

The Efficiency Gap: Manual vs. Automated Extraction#

Moving Beyond "Code Reviews" to Visual Reverse Engineering#

In a high-stakes M&A environment, you don't have six months to understand a legacy system. You need to know now what the migration path looks like. This is where Replay changes the calculus. Instead of reading lines of code, we record real user workflows.

By capturing the interaction between the user and the legacy interface, Replay’s engine maps the underlying state, API calls, and business logic. It turns a video recording into a source of truth for reverse engineering.

Why "Video as Source of Truth" Matters#

Most technical due diligence ignores the "implicit" logic—the weird validation rules or data transformations that only happen on specific screens. By recording these flows, Replay generates:

1. •API Contracts: Understanding exactly how the frontend talks to the backend.
2. •E2E Tests: Automatically creating a safety net for future modernization.
3. •Technical Debt Audit: Identifying dead code and deprecated patterns.

💰 ROI Insight: Reducing the discovery phase from 18 months to a few weeks can save an enterprise upwards of $1.2M in engineering salaries alone during a post-merger integration.

Technical Implementation: From Legacy Flow to Modern Component#

When we talk about "modernizing without rewriting," we mean extracting the DNA of the legacy system and re-expressing it in a modern stack (like React and TypeScript).

Below is an example of what an extracted component looks like after Replay processes a legacy workflow. It isn't just a "reskin"; it's a functional reconstruction that preserves the business logic found during the technical due diligence phase.

typescript
// Example: Modernized React component generated via Replay extraction
// This preserves the complex validation logic found in the legacy "Insurance Claims" portal
import React, { useState, useEffect } from 'react';
import { useLegacyBridge } from '@replay/core';
import { ModernButton, DataGrid, Alert } from '@/design-system';

interface ClaimData {
  id: string;
  status: 'PENDING' | 'APPROVED' | 'REJECTED';
  amount: number;
  policyRef: string;
}

export const ClaimsProcessor: React.FC = () => {
  const [claims, setClaims] = useState<ClaimData[]>([]);
  const { fetchLegacyState, validateBusinessRules } = useLegacyBridge();

  useEffect(() => {
    // Replay identified this specific API endpoint during the visual trace
    const loadData = async () => {
      const data = await fetchLegacyState('/api/v1/claims/active-queue');
      setClaims(data);
    };
    loadData();
  }, []);

  const handleApproval = async (id: string) => {
    // The legacy system had a 14-step validation process
    // Replay extracted these rules into a clean, testable utility
    const isValid = await validateBusinessRules(id);
    
    if (isValid) {
      // Proceed with modern workflow
      console.log(`Claim ${id} approved.`);
    }
  };

  return (
    <div className="p-6">
      <h2 className="text-2xl font-bold">Extracted Claims Workflow</h2>
      <DataGrid 
        data={claims} 
        onAction={handleApproval}
        columns={['id', 'amount', 'policyRef', 'status']}
      />
    </div>
  );
};

⚠️ Warning: Never attempt a "Big Bang" rewrite of a system that lacks a comprehensive API map. You will inevitably miss "dark logic" that exists only in the UI layer of the legacy application.

A 3-Step Framework for Modern Technical Due Diligence#

If you are an Enterprise Architect or CTO overseeing an acquisition, follow this workflow to uncover the true state of the target's technology.

Step 1: Visual Inventory & Recording#

Instead of asking for architectural diagrams (which are likely outdated), have the target company’s subject matter experts (SMEs) record their most critical business workflows using Replay. This captures the "as-is" state of the system, including all the quirks and edge cases that documentation misses.

Step 2: Automated Blueprinting#

Replay processes these recordings to generate Blueprints. These are visual maps of the application's architecture. At this stage, you can see:

• •Every API dependency.
• •The complexity of the component tree.
• •Data flow bottlenecks.
• •Security vulnerabilities in the legacy transport layer.

Step 3: Technical Debt Quantification#

Using the generated audit, you can now put a dollar value on the modernization effort. If Replay shows that 40% of the screens share a common logic pattern, you can move those into a shared Library (Design System), cutting your modernization timeline by 70%.

📝 Note: For regulated industries like Financial Services or Healthcare, Replay offers on-premise deployment to ensure that sensitive PII/PHI never leaves your secure environment during the audit process.

The Future of Modernization: Understanding Over Rewriting#

The era of the "18-month rewrite" is ending. The risk is too high, and the $3.6 trillion technical debt mountain is growing faster than we can hire developers to climb it. The future of enterprise architecture is understanding what you already have.

By using visual reverse engineering during technical due diligence, you stop guessing and start measuring. You turn a "black box" into a documented, modular codebase that can be migrated incrementally. This "Strangler Fig" approach—supported by automated extraction—is the only way to modernize at the speed of business.

Frequently Asked Questions#

How long does technical due diligence take with Replay?#

While manual audits take 4-8 weeks, Replay can map the core workflows of an enterprise application in 5-10 days. The extraction of functional components happens in parallel with the recording process.

Can Replay handle mainframe or "green screen" legacy systems?#

Yes. As long as there is a web-based or terminal-emulated interface that a user interacts with, Replay can record the workflow and extract the underlying logic patterns to map them to modern API structures.

What about business logic preservation?#

This is Replay’s core strength. By recording the actual execution of the code during a user session, we capture the business logic in situ. This ensures that the "hidden" rules—often buried in thousands of lines of legacy code—are identified and preserved in the new React-based architecture.

Does this replace my engineering team?#

No. Replay is a "force multiplier" for your architects. It handles the "archaeology" (the 40 hours per screen of manual documentation) so your senior engineers can focus on the high-level architecture and the future-state roadmap.

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Ready to modernize without rewriting? Book a pilot with Replay - see your legacy screen extracted live during the call.