Tech Debt as a strategic tool

I once had the pleasure of being on the receiving end of an incredibly in-depth due diligence process. A Private Equity firm was looking to move on a growth investment; they brought in a specialist company to spend weeks poking at every corner of our organisation. We had half-day sessions, day after day, covering everything from pen tests and infrastructure to our hiring policies and the state of our codebase. They looked at documents and graphs and more.

As a CTO or CEO, this is might be a moment you brace for impact. Why? Because of “tech debt”. In many boardrooms, that phrase is treated like a dirty secret - a sign of a sloppy engineering team or a lack of discipline. (If you’re wondering how to talk to your board about this, I’ve written about that separately.)

However, these auditors were seasoned professionals. They didn’t ring the alarm when they saw shortcuts in the code or aging libraries; instead, they looked at how we managed it. They saw that our debt was deliberate, documented, and being paid down opportunistically. We passed the DD, and the deal went through.

The experience reinforced a belief I’ve held for thirty years: tech debt isn’t a bug; it’s a financial tool.

What we actually mean by “Debt”

In simple terms, tech debt occurs when you choose a “quick and dirty” solution today instead of a perfect, scalable one that takes much longer to build. You do this because you need to hit a market window, satisfy a key client, or test a hypothesis. Or you just don’t have the resources, there and then, to do it the way you might want to.

People assume tech debt is always “bad” because it makes the system harder to change later. It creates friction; it slows down new features. In engineering circles, this friction is the “interest” on the loan. If you ignore it, the interest compounds until your team is spending 90% of their time just keeping the lights on, rather than building anything new.

Leverage, not Laziness

If you’re a CEO or an investor, you don’t fear financial debt; you fear unmanaged debt. You use credit to grow faster than your current cash flow allows. Tech debt is exactly the same. It is a way to “borrow” time from the future to create value today.

If you refuse to take on any tech debt, you’ll likely build a gold-plated platform that arrives eighteen months too late to a market that has already moved on. That is a far greater risk than having to refactor some code next year.

The problem isn’t the existence of the debt, it’s the lack of an interest-repayment strategy. The most dangerous type of debt is “accidental debt”—the mess created by developers who don’t know better or don’t care. That is just poor craftsmanship. But “intentional debt”—where the CTO says, “We’re going to hard-code this integration for now so we can sign this £1m contract”—is a sound business decision.

Managing the Balance Sheet

In that PE due diligence, the auditors weren’t looking for a perfect codebase. They were looking for a “clean” balance sheet. They wanted to see that we knew exactly where we had taken shortcuts and that we had a plan to address them.

Our strategy was simple: opportunistic repayment. Every time we touched a particular module to add a new feature, we’d spend an extra 20% of the time cleaning up the debt in that specific area. We weren’t stopping the world for a “Grand Refactor” (which is almost always a mistake); we were paying down the interest as we went.

The Pragmatic Bottom Line

For a CEO, the goal shouldn’t be “zero tech debt.” A company with no tech debt is likely moving too slowly. Your goal should be “manageable debt.”

Takeaway

Ask your technical lead two questions:

Where are we currently “borrowing” time to meet our goals?

What is the interest rate on that debt?

If they can’t answer, you have a problem. If they can, then you aren’t looking at a mess; you’re looking at a strategic lever for growth.