What a Technical Due Diligence includes under independent technical criteria

Most TDD reports that reach an investment committee are incomplete. Not because the consultant lacks capability, but because nobody required them to be complete.

A TDD can be a 20-page document with photographs and a reassuring executive summary. Or it can be the technical analysis that genuinely protects the investment decision. The difference is not the thickness of the report. It is what has been verified, how, and against which reference standard.

independent technical criteria for Technical Due Diligence are not a quality label. They are a verification protocol defining what must be analysed, in what depth, and what must be documented. When a TDD is produced under those standards, the investment committee receives something it can use to make decisions — not merely to justify them.

What a rigorous TDD must include

1. Structure and building envelope

Confirming that the building is standing is not enough. A rigorous TDD assesses the load-bearing structure, the roof, the facade and the envelope elements. It identifies existing defects, judges their likely evolution and quantifies the cost of intervention. The difference between "roof with water ingress" and "roof with 3 years of remaining service life and a replacement cost of €180,000" is the difference between a warning and a decision.

2. Building services

HVAC, ventilation, plumbing, fire protection, electrical installations, lifts, security systems. Each has a service life, a current condition and a compliance cost. A good TDD assesses the real condition of each one, tests it against current regulations and forecasts the CAPEX required over the next 5 and 10 years.

3. Regulatory compliance

Planning regulations, activity and works licences, energy performance certificate, accessibility, fire protection. Assets that have changed use or been refurbished without the corresponding permits generate contingencies that can stall a transaction. Detecting them before closing is part of the job.

4. Energy performance and carbon footprint

The building's energy label is no longer enough. Funds with an ESG mandate need real consumption data, an analysis of the gap between certified and actual performance, and a verified improvement plan. Without that, assets cannot evidence the criteria large institutional investors demand today.

5. CAPEX forecast over 5 and 10 years

Not a single number. A detailed line-by-line estimate, with documented sources, current market prices and a planned intervention schedule. The CAPEX estimate is the part of the TDD with the greatest impact on price negotiation and on how the transaction is financed.

6. Prioritised technical risks

A good TDD does not list problems. It prioritises them. It classifies each risk by economic impact, urgency of intervention and likelihood of materialising. The investment committee needs to know the three risks that could break the deal — not read 40 pages of unranked technical observations.

Why most TDDs fall short

The most frequent problem is not a lack of technical experience. It is a lack of independence and of time.

A TDD produced in 48 hours to avoid losing an exclusivity window is an incomplete TDD. A TDD produced by a firm that also wants the project management mandate carries a conflict of interest that affects its conclusions. And a TDD without documentary verification — visual inspection only — leaves out the planning and compliance contingencies that are usually the most expensive to resolve.

Independence is not an added value in a TDD. It is the minimum requirement.

What happens when the TDD fails

Typically, the risk materialises after closing, when negotiation is no longer possible. A roof that fails after 18 months. A lift that does not comply and must be replaced. An activity licence that does not cover the actual use. A fire protection system that fails its annual inspection.

In all these cases the real cost of the acquisition was higher than the purchase price. And there were signals a rigorous technical due diligence would have detected.

The TDD as a negotiation tool

When the TDD is complete it becomes a negotiation argument. It quantifies risks in economic terms and allows the buyer to adjust price, require retentions from the seller or structure specific warranties. A TDD identifying €600,000 of mandatory CAPEX does not stop the deal. It makes it more precise.