The technical team is the backbone of any tech-driven company, responsible for developing, maintaining, and innovating the company’s products and services. Even where a company does not sell a technical product of their own, but uses technology to manage its day-to-day business, the team plays a critical role to ensure business operations run smoothly. When private equity firms consider investing in a company, evaluating the competence of this team is important to help understand just how ready the company is to take its next steps.
What is Team Competence?
Team competence refers to the skills, experience, and expertise of the technical team members. It includes their ability to work effectively, adapt to new challenges, and drive the company’s technology forwards. Assessing this competence involves evaluating individual qualifications, team dynamics, and the overall capability of the team to meet current and future business needs.
In this context, it is important to remember that “Team” is not just the full-time-employees (FTE) of a company, it includes all the temporary staff, contractors and partner organisations who support the company operations.
Why is Team Competence Important?
A competent team is crucial for continuous innovation and staying ahead of the competition. Investors want to ensure that the team can develop new products and improve existing ones. Skilled team members enhance the operational efficiency of the whole company, reducing the likelihood of errors and downtime. This can then translate into direct cost savings and better resource utilisation.
A team with the right balance of expertise can scale operations effectively, supporting the company’s growth, vital for companies looking to expand their market presence.
Competent teams are better equipped to anticipate and mitigate risks. They can handle technical challenges and ensure the company’s technology infrastructure remains robust and secure.
What questions am I likely to be asked about my team? What documents should I gather?
Qualifications and Experience
Questions:
What are the educational backgrounds and professional qualifications of the team members?
How many years of relevant experience do the team members have?
Are there any industry certifications held by the team?
Evidence:
CVs and LinkedIn profiles of key team members.
Documentation of professional certifications and qualifications.
Case studies or portfolios showcasing past projects.
Team Structure and Dynamics
Questions:
How is the technical team structured?
What are the roles and responsibilities of each team member?
How well do team members collaborate and communicate?
Evidence:
Organisational charts showing team structure.
Role descriptions and team member responsibilities.
Feedback and performance reviews from within the team.
Track Record and Performance
Questions:
What successful projects has the team completed?
How does the team handle project management and deadlines?
Are there any notable achievements or innovations from the team?
Evidence:
Project documentation and timelines.
Performance metrics and key performance indicators (KPIs).
Records of project outcomes and innovations.
Adaptability and Learning
Questions:
How does the team stay updated with the latest technologies and industry trends?
Are there opportunities for continuous learning and development?
How has the team adapted to past challenges or changes?
Evidence:
Records of training sessions, workshops, and conferences attended.
Documentation of learning and development programmes.
Examples of how the team has adapted to new technologies or challenges.
Providing a detailed CV and professional profile for key team members really help in driving this part of the TDD conversation. These documents provide insights into the qualifications, experience, and skills of the team. In the same way that key members of the team provide the backbone of your technical capabilities, a new investor will be looking to understand whether they will still form that backbone in the future, or if additional help is needed.
Organisational charts and role descriptions help investors understand the team structure and the specific responsibilities of each member. This clarity is crucial for assessing how well the team overall meets business needs. One key item to note is that the “technology team” may not just be your “IT team” or “Development team”. The wider technology team in the organisation, and how this works is key and may include people such as Product Managers, Data Scientists, Testers and Customer Success specialists in addition to operational IT staff and Software Engineers.
Records of past projects, performance metrics, and KPIs give investors a clear picture of the team’s capabilities and achievements. These documents demonstrate the team’s track record and effectiveness in delivering results.
Evidence of continuous learning and development activities shows that the team is committed to staying updated with the latest industry trends and technologies. This commitment is essential for long-term success and innovation.
Evaluating the technology team is critical for Technical Due Diligence. Investors need to ensure that the company’s team has the skills, experience, and expertise to drive innovation, support growth, and manage risks effectively; if not, they will be interested in the hires and support needed to attain those levels. For a company founder, being able to show professional profiles, and evidence of team achievements can facilitate a smoother due diligence process. Involving members of the team to help demonstrate how well they work together (if they do!) can be a powerful tool to make the company more appealing to potential investors.