Due Diligence Report
Produces U.S. corporate/M&A due diligence reports summarizing legal risks across corporate records, contracts, liabilities, regulatory compliance, and IP. Use when drafting a diligence report, red flags memo, or legal risk summary for acquisitions, asset purchases, minority investments, or financing. Trigger keywords: due diligence, diligence report, red flags, M&A, acquisition, target review, HSR, CFIUS, reps and warranties, indemnity.
Due Diligence Report
Deliver a structured legal risk report that supports deal decisions and negotiation strategy.
Prerequisites
- Transaction overview — structure, parties, valuation, timeline, governing law, closing conditions.
- Data room index — document list with dates, versions, and confidentiality labels.
- Diligence scope — materiality thresholds (revenue %, dollar threshold, key customers).
- Deal sensitivities — regulatory approvals, IP dependencies, key contracts, employee retention.
- Prior work product — existing diligence memos or red-flag lists, if any.
Output Structure / Process
1) Report Sections
- Executive summary — top 5–10 risks, required approvals, open items.
- Risk rating framework.
- Findings matrix (issue-level table).
- Area analyses: Corporate/Cap Table, Material Contracts, Litigation/Claims, Regulatory/Compliance, IP/Technology, Employment/Benefits, Real Estate/Leases, Taxes, Data Privacy/Cybersecurity, Environmental, Insurance, Other as applicable.
- Open items and follow-up requests.
- Deal protections and drafting recommendations.
2) Risk Ratings
| Rating | Definition | Deal Impact |
|---|---|---|
| Critical | Likely deal-breaker or closing condition | Resolve pre-close or terminate |
| Significant | Material value/operations impact | Address with price, reps, indemnity, escrow |
| Moderate | Manageable risk | Address with covenants or post-close plan |
| Minor | Low impact | Note for awareness |
3) Findings Matrix Template
| Area | Issue | Source (Doc/§/Date) | Risk | Exposure/Impact | Recommendation | Proposed Deal Protection |
|---|
4) Area Checklist
| Area | Required Checks |
|---|---|
| Corporate/Cap Table | Formation docs; charter/bylaws; equity issuances; options/RSUs; board/stockholder approvals; subsidiaries; liens |
| Material Contracts | Change-of-control; assignment; exclusivity; MFN; termination; renewals; pricing; SLAs; non-compete; key customer/supplier concentration |
| Litigation/Claims | Pending/threatened claims; settlements; subpoenas; arbitration; investigations |
| Regulatory/Compliance | Licenses/permits; sanctions/export; antitrust/HSR; CFIUS; industry regulators; SEC/FINRA if applicable |
| IP/Technology | Chain of title; employee/contractor assignment; OSS compliance; licenses in/out; infringement claims; domains |
| Employment/Benefits | Key employee agreements; non-solicit; wage/hour claims; benefits plans; 401(k); union matters |
| Taxes | Returns; audits; NOLs; sales/use tax; transfer pricing; tax sharing agreements |
| Privacy/Cybersecurity | Privacy policies; DPAs; breach history; security audits; data localization; HIPAA/GLBA/FERPA if applicable |
| Real Estate | Leases; environmental reports; zoning; landlord consent |
| Environmental | Permits; contamination; remediation obligations; indemnities |
| Insurance | Coverage types; exclusions; claims history; tail coverage |
5) Executive Summary Template
Executive Summary
- Critical risks: [Issue | Impact | Required action]
- Significant risks: [Issue | Impact | Proposed deal protection]
- Required approvals: [HSR/CFIUS/Industry/Other]
- Open items: [Missing docs or confirmations]
6) Deal Protections Mapping
| Risk Type | Drafting Lever |
|---|---|
| Known liability | Specific indemnity; escrow; special rep |
| Compliance gap | Pre-close covenant; condition to close |
| Contract consent | Closing condition; bring-down |
| IP ownership gap | Assignment; rep; escrow holdback |
| Litigation exposure | Litigation rep; cap; survival term |
7) Citation Format
- Quote only material clauses; cite as
DocName §X (Date). - Flag missing or inconsistent documents in the open items section.
Guidelines
- Maintain neutral, risk-focused tone; avoid advocacy.
- Tie each issue to evidence and transaction impact.
- Use
[VERIFY]for any legal citation or regulatory threshold not confirmed. - Assume U.S. transaction unless specified; call out non-U.S. jurisdictions explicitly.
- Separate factual findings from recommendations.
- Do not invent documents or confirm approvals without evidence.
No additional documents ship with this skill.
Related Skills
United States
·
corporate
Action by Written Consent of Incorporator
Drafts a U.S. corporate Action by Written Consent of Incorporator for post-formation organizational actions (adopting bylaws, appointing directors, t…
United States
·
corporate
Written Consent in Lieu of Meeting
Drafts U.S. corporate written-consent instruments (board, shareholder, member) as substitutes for formal meetings. Triggers when counsel requests boa…
United States
·
corporate
Written Consent in Lieu of Meeting
Drafts Written Consents in Lieu of Meeting for corporate boards or shareholders. Ensures compliance with state corporate law (e.g., DGCL §§141(f), 22…
United States
·
corporate
Shareholder Voting Agreement
Drafts enforceable shareholder Voting Agreements coordinating director elections, fundamental transactions, charter amendments, and other corporate m…
United States
·
corporate
Transitional Services Agreement
Drafts a Transitional Services Agreement (TSA) for post-closing seller-to-buyer service delivery in U.S. M&A transactions. Use when a corporate acqui…
Comments
Loading…