What does an AWS due diligence scan produce for deal teams?

Two deliverables: (1) A specific dollar figure — not 'cloud costs seem high' but '$3.2M in annualized savings across 14 accounts.' (2) A post-close execution plan identifying which optimizations are safe to implement automatically and which require manual review.

AWS Due Diligence: Why PE Firms Should Scan Cloud Spend Before the LOI

Q: Why should PE firms scan AWS spend before the LOI?

A pre-LOI AWS scan reveals recoverable waste that affects valuation. The seller almost certainly hasn't optimized their AWS environment — if they had, their EBITDA would be higher and they'd command a better price. The buyer who scans before the LOI knows something the seller doesn't, producing a more accurate valuation for both parties.

Due diligence reviews cloud spend as a cost category. It rarely quantifies what's recoverable. The result: PE firms either overpay because they don't account for recoverable waste, or they leave money on the table because they don't realize how much margin is hiding in the AWS bill.

Both Problems Have the Same Solution

Scan the target's AWS environment before the LOI.

Most deal teams review the AWS bill during due diligence and flag it as "high" or "growing." That's not wrong — but it's not useful. What's useful is knowing exactly how much of that bill is waste, which services are driving it, and what it costs to recover. That information changes the bid, the post-close plan, or both.

What a Pre-Deal Scan Reveals

A CloudFix scan takes 24 hours and identifies specific savings opportunities across the target's entire AWS organization. Not a ballpark estimate — a detailed breakdown:

EBS volumes that should be migrated to cheaper storage tiers
S3 buckets on the wrong storage class
Idle resources that no one noticed — running but serving no traffic
EC2 instances that are overprovisioned for their actual workload
Commitment coverage gaps — predictable workloads paying on-demand rates

For the deal team, this produces two concrete deliverables:

What You Get From the Scan

1. A specific dollar figure. Not "cloud costs seem high" but "$3.2M in annualized savings across 14 accounts." That number either adjusts the bid or confirms the thesis.

2. A post-close execution plan. The scan identifies exactly which optimizations are safe to implement automatically and which require manual review. The deal team walks into Day 1 with a prioritized action list, not a vague mandate to "look at cloud costs."

The Information Asymmetry

Here's the dynamic most deal teams don't think about: the seller almost certainly hasn't optimized their AWS environment. If they had, their EBITDA would be higher and they'd be asking for a better price. The waste in the AWS bill is margin the seller is sitting on without realizing it.

The buyer who scans before the LOI knows something the seller doesn't. That's not aggressive — it's thorough diligence. And it produces a more accurate valuation for both parties.

The Cost of Waiting

Every month between signing and optimization is a month of savings that doesn't exist. On a $2M annual savings opportunity, that's $167K per month in unrealized value. Over a six-month integration delay, that's $1M — or $8.4M in equity value at exit that you chose not to capture.

How It Works in Practice

The process fits into existing due diligence workflows without adding complexity:

Step 1: During Due Diligence

Request read-only access to the target's AWS Cost & Usage Report. This is standard in technology due diligence — no special permissions or engineering cooperation required.

Step 2: Run the Scan

24 hours later you have a detailed savings report broken down by service, account, and resource type. The report shows both the total opportunity and the specific actions needed to capture it.

Step 3: Adjust Your Model

If the scan shows $2M in recoverable waste, that's $16.8M in equity value at standard multiples. Factor it into the bid. If the number is small, you've confirmed the seller is already efficient — which is also valuable information.

Step 4: Post-Close, Deploy Immediately

The scan already identified what to fix. CloudFix and RightSpend execute the optimizations automatically while the integration team focuses on bigger priorities. First savings hit within 24-48 hours of deployment.

Case Study: What a Real Scan Found

When ESW Capital acquired Khoros, CloudFix scanned the target's $19M annual AWS spend and flagged $3M in waste within 72 hours. That's 16% of total spend that wasn't in anyone's deal model. At 8.4x EBITDA, that's $25M in equity value that the buyer identified before the integration team held its first meeting.

The RightSpend layer added another $1-2M in savings through optimized commitment coverage — savings that required no new RIs, no lock-in, and no engineering time to capture. Combined, the optimization delivered Commitment Free Discounts that adjusted automatically as the infrastructure changed post-acquisition.

Khoros by the Numbers

Annual AWS spend: $19M
Waste identified in 72 hours: $3M (16%)
Additional savings via RightSpend CFDs: $1-2M
Total recoverable: $4-5M annually
Equity value at 8.4x: $34-42M
Time to identify: 72 hours

What Makes AWS Different From Other Due Diligence Areas

Most areas of tech due diligence require inference. You can assess the engineering team's quality, but you can't quantify it. You can review the product roadmap, but you can't predict its success. AWS cost optimization is one of the few areas in diligence where you can produce a precise, auditable dollar figure in 24 hours.

That figure is useful at every stage of the deal:

Pre-bid: Adjust the offer based on recoverable waste
During negotiation: Use specific savings to justify price adjustments
Post-close Day 1: Begin capturing value immediately with a pre-built execution plan
Board reporting: Show measurable EBITDA improvement within the first quarter

Frequently Asked Questions

Why should PE firms scan AWS spend before the LOI?

The seller almost certainly hasn't optimized their AWS environment — if they had, their EBITDA would be higher and they'd command a better price. The buyer who scans before the LOI knows something the seller doesn't, producing a more accurate valuation for both parties.

How long does an AWS due diligence scan take?

A CloudFix scan takes 24 hours and identifies specific savings opportunities across the target's entire AWS organization. The report breaks down waste by service, account, and resource type with specific dollar amounts for each.

Does the seller need to provide special access?

Standard read-only access to the AWS Cost & Usage Report is sufficient. This is already standard in technology due diligence — no special permissions or engineering cooperation required.

What happens to the scan results post-close?

The scan doubles as a post-close execution plan. It identifies which optimizations are safe to implement automatically and which need manual review. CloudFix and RightSpend can begin executing immediately on Day 1 — the deal team already knows what to fix and in what order.

How accurate is the savings estimate?

The scan uses actual utilization data from the AWS environment — not benchmarks or industry averages. Savings estimates are based on the target's real usage patterns, existing commitments, and recoverable waste. The margin of error is typically within 5-10%.

Request a Pre-Deal AWS Assessment

Get a specific dollar figure for any acquisition target's AWS waste. 24-hour turnaround, no commitment, no engineering access required.

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