Tenzinger sells Medicore – efficiently and successfully thanks to vendor software due diligence

Case

How YieldDD’s vendor software due diligence was a no-brainer and gave Tenzinger a head start.

How do you sell a software company?

“Medicore’s move to independence is like a student leaving home,” says Auke van Urk. “For further growth, sometimes it’s better to stand on your own two feet.” Until last year, Medicore, best known for its electronic health and client records, operated alongside three other subsidiaries under the Tenzinger umbrella, in which Van Urk is a co-shareholder. Their shared ambition is to harness innovative technology, data, and, in particular, AI to help tackle societal challenges.

The advantages of such a group structure, the ability to share knowledge and technology, no longer outweighed the fact that management’s attention was always divided, Van Urk explains. “For its next growth phase, Medicore needed leadership fully dedicated to that mission. Independence was the logical choice.” But how do you sell a software company in the best possible way?

Tenzinger knew that interest among investors was strong, with more than ten potential buyers eventually engaged. That called for a structured sales process where each had a fair chance.

Vendor software due diligence was a no-brainer

A crucial element of that process was a vendor software due diligence by YieldDD. Alongside financial and legal due diligence, this was a natural step, Van Urk recalls: “We are tech entrepreneurs ourselves. For us, technology in a transaction is just as important as the financial and legal aspects. Frankly, I think companies that skip software due diligence underestimate its importance. If your technology isn’t in order, such a review won’t make you happy. But for us, it was a no-brainer, a sign of strength. It shows you have confidence in the quality and maturity of your technology.”

Fresh insights from an external perspective

What did the review deliver? First and foremost, according to Arie Bouw, CTO at Tenzinger, it provided an independent assessment of the technology’s quality and state. “Are you really as good as you think, or are there areas to improve? You want to know that before sitting down with potential buyers.”

For Medicore, no red flags emerged, at most issues in the category ‘we need to look at this again’. As Bouw puts it:

Arie Bouw - Tenzinger

"Your house is never completely tidy. There are always things to improve. But even then, such an assessment adds value. When external experts ask questions and provide feedback, this leads to fresh insights within your own team. If you have to articulate why you’ve made certain choices, you have to think about them more carefully than if you just keep doing them. That provides useful refinement."

Straight to the point with buyers

Bouw cites the tangible efficiency and cost benefits within the sales process as the second reason for Tenzinger to conduct vendor due diligence. “Otherwise, every potential buyer would run the same assessment, draining time and energy from your team. Instead, we had an independent report available to all from day one. That meant discussions could immediately go deeper, without repeating the basics of our software.”

Entering the process with a head start

Finally, there was a third, specific reason for engaging YieldDD: Medicore’s migration to the Azure cloud. After a proof of concept, the company planned to go live for all customers, precisely during the due diligence process. “Such a migration always involves risk,” Bouw says. “That’s why we asked YieldDD to review our plans and timelines. With a positive assessment and an independent report in hand, we were able to anticipate questions from potential buyers, putting us 2-0 ahead."

That independence also had to be verifiable. “If buyers weren’t allowed to speak directly with the author of such a report, the report would have little value,” Bouw acknowledges. “So we organized expert sessions where YieldDD met buyers one-on-one, without us present. The experts at YieldDD were free to answer questions and share their views. And the report didn’t just cover code analysis. It also looked at our processes, which are at least as important. How you write code ultimately determines the quality of the output. That’s a conversation you can and should have.”

A mature partner

Looking back, Bouw describes the vendor due diligence as a complex project with internal and external sensitivities. “That’s why you need a partner with the maturity to handle it. The experts at YieldDD understood this well and always struck the right tone. Beyond the technical content, that interpersonal finesse is crucial for acceptance of their work.”

In the end, Tenzinger could rely on a process that was both technically robust and relationally strong – giving the sale of Medicore a rock-solid foundation.