Practice team assessment vocabulary in technical due diligence: bus factor, team composition, hiring pipeline, technical hiring velocity, and team health indicators.
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A due diligence report says 'the bus factor is 1 for the core payment service'. What is the bus factor?
Bus factor (or truck factor) measures team knowledge concentration risk. A bus factor of 1 means only one person has the knowledge to maintain a system — if they leave, the team loses critical institutional knowledge. In due diligence, a bus factor of 1 on critical services is a significant retention and operational risk that affects valuation.
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'The team has 3 experienced engineers and 2 recent hires.' What does this team composition signal in due diligence?
Team composition analysis in due diligence examines the balance of senior and junior engineers, their tenure, and specialisation coverage. A team too heavy on recent hires with few senior engineers may struggle with architectural decisions and delivery quality. Acquirers assess whether the team can scale and maintain quality post-acquisition.
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'The engineering hiring pipeline is strong.' What does a strong hiring pipeline indicate?
A strong hiring pipeline means the company can scale its engineering team effectively: it has a known employer brand, a sourcing strategy, a structured interview process, and a competitive offer process. In due diligence, a weak or non-existent hiring pipeline is a growth risk — post-acquisition scaling may be slower and more expensive than projected.
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What is 'technical hiring velocity' in a team assessment?
Technical hiring velocity measures how fast and effectively a company can add engineering talent. It includes metrics like time-to-hire (from job posting to accepted offer), offer acceptance rate, and how many qualified candidates pass the technical screen. Low velocity means the team cannot scale quickly — a risk for growth plans and post-acquisition integration timelines.
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In a team health assessment, what does 'team attrition risk' refer to?
Attrition risk assesses the likelihood that valuable engineers will leave after the acquisition. Common triggers include: compensation packages that lag post-acquisition norms, culture clashes between the acquired and acquiring companies, key engineer retention clauses not being offered, and uncertainty about role changes. High attrition risk for key engineers is a major due diligence flag.