Tech red flags that will kill your deal before price negotiations begins

Price haggling is often blamed for stalled deals, but more deals die of unseen technical issues. In our Vendor DD work at Yuki, we’ve identified three recurring red flags that repel buyers and slash valuations—even before term sheets land on the table.

Red Flag #1: Legacy Infrastructure & Upgrade Debt

‍A “modern” microservices label means little if your data layer is stuck on decade-old servers. Unaddressed legacy systems introduce hidden costs—buyers factor in refactoring budgets or outright replacement. In a recent Yuki engagement, what looked like a €100 k hosting bill ballooned to a projected €500 k migration effort, trimming 10% off the initial valuation.

Red Flag #2: Security & Compliance Blind Spots

‍GDPR, SOC 2, ISO 27001—checklist compliance isn’t enough. Buyers demand proof: evidence of penetration tests, documented incident-response plans, and a clean audit trail. One client’s lack of formal change-control logs led an acquirer to insist on a €250 k escrow holdback until remediation.

Red Flag #3: Lack of Observability & Monitoring

‍“If it isn’t measured, it can’t be trusted.” Without real-time dashboards for uptime, latency, and error rates, buyers perceive operational risk as unquantifiable risk—and they apply a steep discount. In our scans, startups without basic observability frameworks saw their multiples drop by up to 20%.

A 5-Step Scan & Remediation Process

1. Inventory Your Stack—cloud, containers, data stores.
2. Run Automated Health Checks—vulnerability scans, performance baselines.
3. Prioritize Gaps by Impact—security gaps first, then scalability, then observability.
4. Apply Quick Wins—patches, simple logging agents, IaC templates.
5. Document & Present—turn remediation logs into buyer-ready slides.

Tech red flags aren’t deal killers when identified early—and often remediable at a fraction of the perceived cost. A proactive scan saves valuation, time, and credibility.

Curious to evaluate your tech and product? 
👉 Contact us for a demo of Yuki’s Tech DD

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