Today I'm joined by Kevin Knoepp and Zack Seely. Zach acquired a healthcare software company called FSI in late 2020 with technical diligence help from Kevin, a software due diligence advisor and Trilogy operating executive. Our conversation doesn't discuss the attractiveness of software as an investment, which it very much is, but rather on how to properly diligence software and operate and improve the business once acquired. We review common technical issues in software companies, how much technical debt is acceptable, Zach's experience in diligence and operating improvements at FSI, and constructing a capable team to move a software business forward.Listen weekly and follow the show on Apple Podcasts, Spotify, Google Podcasts, Stitcher, Breaker, and TuneIn.Links:Zach Seely on LinkedInKevin Knoepp on LinkedInFSIMartin Fowler - The Strangler Fig tree patternTopics:(4:00) - Zach’s experience at FSI at the acquisition point(6:05) - Zach’s skills background & where Kevin fit into FSI(7:34) - Kevin’s process for analyzing the technical side of software businesses(10:50) - What are some red flags you’ll see in diligence?(12:22) - What’s your perspective on Technical Debt?(15:03) - How did you structure your deals or build teams to adjust for technical challenges you found?(17:03) - How did you first set your priorities for what to fix with FSI?(22:22) - What are some must fixes before you can complete an acquisition?(23:52) - What sorts of gaps did you focus on in the first 18 months at FSI?(26:54) - How did you evaluate the technical team before the acquisition?(28:12) - What kinds of questions do you ask the technical teams to assess their abilities?(31:46) - How do you evaluate and mitigate risk on a technical team?(36:46) - What 2 to 3 changes did you make to the technical team right off the bat?(41:59) - What sorts of processes have you set up to make work more transparent?(45:11) - What are your thoughts on outsourcing vs. insourcing tasks or positions?(49:19) - Is it common for software companies to offer some sort of budget for outsourcing services to their developers?(51:27) - How do you evaluate if your team is utilizing capacity properly?(54:34) - How did you evaluate FSI’s pricing strategy?(57:15) - What common parts of a pricing strategy could use the most improvement in software businesses?(59:19) - What strongly held belief have you changed your mind on?(1:01:30) - What’s the best business you’ve ever seen?