That’s precisely how acquisitions at my current and past company worked. Everyone signs NDAs, there’s a fee paid by the purchaser for the time should they decline the deal, and the audit commences.

I’ve been asked to do the evaluation a few times and it’s pretty straightforward. Even if you think the code is of poor quality, it may still make sense to complete the purchase because of the business case.

Not necessarily. It depends on the company acquiring. I've seen M&As focus solely on the relationships (ex, customers), so the tech DD was just checkboxes without deep dives.

Not necessarily… what? This is my actual professional experience. I’m sure people just buy things without any due diligence somewhere but I have never seen it.

In one case my judgement was that the customer list was all that there was of value. They opted to not buy that company.

I didn't say they skipped DD.

Were these companies more public and independently well capitalized or cash fires with little bargaining leverage for asset sales?

A mix of everything. The deals are always worth millions of dollars.

It’s a pretty standard procedure, so yeah.

It’s worth mentioning that Musk waived his right to do so.

I once read about an acquisition attempt by Google which eventually failed because Google found codebase less than impressive. So I guess this is normal to review codebase before a buyout.

Yes, that’s normal. At least when a PE from is buying. NDAs signed, automated scanners run, consultants sent in, etc.

Inspecting the source code is a condition of all deals I've been involved with. Most sensible people want to see what they buying, unless they are under pressure to close fast due to competition. It's a lot like buying a house.

yes. would you buy a company without reviewing and inspecting its assets?

remember you have to tell us if you’re elon musk.

Getting/giving access to the actual code/backend (especially as a competitor!) is a heavily negotiated diligence request.

The seller can simply refuse without even giving a reason.

ITT:

People are throwing around the phrase "audit" liberally. Audit will have a defined (and likely limited) scope and is typically more about compliance, e.g., Do you have the correct number of Microsoft Office licenses per accounting records?