due-diligence-report

name	due-diligence-report
language	en
description	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

1. Transaction overview — structure, parties, valuation, timeline, governing law, closing conditions.
2. Data room index — document list with dates, versions, and confidentiality labels.
3. Diligence scope — materiality thresholds (revenue %, dollar threshold, key customers).
4. Deal sensitivities — regulatory approvals, IP dependencies, key contracts, employee retention.
5. Prior work product — existing diligence memos or red-flag lists, if any.

Output Structure / Process

1) Report Sections

1. Executive summary — top 5–10 risks, required approvals, open items.
2. Risk rating framework.
3. Findings matrix (issue-level table).
4. 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.
5. Open items and follow-up requests.
6. 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.