When Product Focus Overshadows Enterprise IT

In high-growth mid-market software companies, investment naturally flows toward customer-facing products, user experience, and revenue growth.

The internal systems that support the business often develop at a different pace. Finance, billing, customer support, cybersecurity, and compliance can evolve through a mix of standalone tools, manual processes, and informal ownership.

For PE deal teams, a strong product can obscure gaps in the company's ability to support growth efficiently. When enterprise systems lag behind the product, three friction points can emerge post-close:

▪ Scalability bottlenecks

The product may support more customers, while billing, provisioning, and customer support still depend on manual work. As volume grows, so do staffing needs, errors, and costs, limiting operating leverage.

▪ Fragmented financial and operational visibility

Disconnected systems make it harder to reconcile financial and operating data across the business. Management relies on spreadsheets and manual consolidation, delaying reporting and making performance harder to assess.

▪ Weak data governance and controls

Unclear ownership of data, inconsistent access controls, and informal vendor oversight can increase security and compliance exposure. Addressing these gaps becomes more complex as the business grows.

Incorporating Systems Maturity into Underwriting

IT diligence should identify these gaps before close and translate them into practical priorities, estimated costs, and implementation timelines. Deal teams can then incorporate the required investment and its effect on margins into the underwriting model and value creation plan.

Sustainable growth requires enterprise systems and controls that can keep pace with the commercial product.