A code audit is a detailed review of a software codebase to assess its quality, security, maintainability, and alignment with best practices. In M&A and investment contexts, it serves as a critical component of technical due diligence.

A code audit is the systematic examination of a software project’s source code, conducted manually or using automated tools. It aims to uncover flaws, inefficiencies, security vulnerabilities, and areas of technical debt.

The audit can be scoped broadly (entire application) or narrowly (critical modules, APIs, or legacy components), and typically reviews:

• Code structure and consistency
• Use of frameworks and libraries
• Test coverage and CI/CD integration
• Security practices (e.g. input validation, encryption)
• Documentation and readability

Code audits may be conducted by internal teams, external consultants, or third-party due diligence providers like YUKI.

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In Tech & Product Due Diligence, a code audit is one of the most revealing exercises. It allows buyers and investors to:

• Identify red flags: poorly structured code, lack of testing, or vulnerable logic
• Evaluate maintainability: how easily the code can be updated or handed over
• Assess engineering maturity: through patterns, naming conventions, and documentation
• Quantify technical debt: enabling realistic remediation plans
• Forecast integration complexity: especially when merging platforms or teams

The audit not only helps assess risk, but also helps validate the scalability and investment readiness of the product.