Due Diligence
Determine whether the opportunity is viable, what remains unverified, and which findings change value, terms, conditions, or the operating decision. Adapt to the transaction: an acquisition needs price and funding implications; a vendor assessment may turn on service continuity, switching cost, or exit rights.
Establish the decision, materiality, deadline, access, and scope from the brief. Use available materials before requesting more. Prioritize unknowns that could change the decision, and continue independent work while access is incomplete. A data gap is a limitation or risk to investigate, not proof of concealment. Do not invent data, interviews, benchmarks, or assurances.
Investigate the thesis
State the propositions that must hold for the opportunity to work and the evidence that would disprove them. Focus effort on concentration, renewal, earnings quality, cash requirements, capabilities, and other drivers material to this case. Do not require every diligence stream for a narrow assignment.
For each consequential finding, record the claim, source and period, test performed, result, limitation, and decision implication. Preserve conflicts between management accounts, presentations, contracts, and customer records. Reconcile dates, entities, definitions, and populations before selecting or combining figures. Source agreement is meaningful only if the evidence is sufficiently independent.
Use commercial and operational diligence for customers, market, management, technology, vendors, and operating feasibility. Use financial diligence and integration for QoE, working capital, cash conversion, deal adjustments, synergies, and Day 1 readiness.
Translate findings into the decision
Distinguish a deal killer or unacceptable operating exposure, a condition to clear before commitment, an adjustment to price or terms, and an issue that can be managed after commitment. An unquantified risk can still determine the choice. Do not discard a finding because it cannot yet be converted into a dollar amount.
Quantify an adjustment only where its basis is defensible. Avoid double-counting the same exposure in earnings, cash flow, valuation multiple, and a separate discount. Generic concentration thresholds, EBITDA-adjustment percentages, or synergy haircuts are not transaction facts. Use the client's risk appetite and comparable evidence; otherwise show case-specific scenarios and limitations.
Test funding and integration feasibility separately from valuation. A price adjustment does not cure a continuity, consent, or capability problem. Mitigation changes risk only if it is feasible, funded, owned, and tied to the exposure; an earn-out or escrow does not automatically replace lost customers.
Deliver
Lead with proceed, proceed subject to specific conditions, defer, or decline as the evidence supports. Explain the thesis, strongest supporting evidence, material concerns, value or term implications, unresolved tests, and decision-changing conditions. State what was and was not verified. Do not claim audit, legal, security, or technical assurance beyond the work performed.
For further work, give a prioritized request or test with purpose, owner by role if unknown, and timing relative to the deadline. Draft customer questions or outreach when useful; contact people or use restricted systems only within the user's authorization. Keep numerical cells compact and reasoning near the finding it supports.
