M&A Due Diligence Built for What Happens After Close

Due diligence is the investigation a buyer runs on a target before committing to the deal. It tests the assumptions behind the price. Findings can change the valuation, the structure, the reps and warranties, or the decision to proceed at all.

Financial, commercial, operational, legal, tax, technology, human resources and environmental are the common workstreams. Not every deal needs all of them. Scope should follow the thesis and the risks specific to that business.

In middle-market deals the window is usually set by exclusivity, often four to eight weeks. The constraint is rarely analysis time. It is data room quality and management availability, which is why scoping before the data room opens matters.

Commercial diligence looks outward at the market, customers, competition and pricing. Operational diligence looks inward at how the business delivers. One tests whether the revenue is defensible, the other tests whether the margin is repeatable.

A Quality of Earnings report is one product within financial diligence. It normalizes reported earnings to a sustainable run rate. Accounting firms produce it, and we do not. We use it as an input and coordinate around it.

A useful checklist is organized by decision, not by document. For each workstream, name the question, the evidence that would answer it, and what you would do with either answer. Checklists organized only by file type produce volume instead of judgment.

Customer concentration, revenue recognition that flatters growth, and deferred maintenance or capex. Key-person dependency, and systems that cannot support the growth plan. Most are not deal breakers on their own. They change price, structure or the integration plan.

Trace each synergy to a specific action, a named owner and a date. Then size the cost to achieve it alongside the benefit. Any synergy that survives that test can go in the model, and the rest should come out.

Every finding should carry the function it lands in and the action it implies. That turns the findings log directly into Day 1 and 100-day priorities. Done this way, integration planning starts at signing instead of after close.

Add-on diligence is comparative. The question is not only whether the target is sound, but how it fits the platform. Systems, contracts, pricing and org structure get tested against the platform standard, so the integration path is clear before signing.

Ideally at indication of interest, before the data room opens. That gives us time to scope diligence against the thesis rather than against the document index. We can also join mid-process when a workstream needs help.

Yes, and that is the usual arrangement. Your accountants, attorneys and tax advisors keep their scopes. We run the commercial and operational workstreams and keep every provider on one calendar and one findings log.

Either one. On some engagements the sponsor contracts and pays, and on others the platform does. We agree that alongside scope at the start of the engagement.