due-diligence-summary

# Due Diligence Summary Decision-ready diligence summary with risk ratings, evidence citations, and next-step actions for U.S. transactional matters. --- ## Related skills - **Environmental subset** — `phase-i-esa` for ASTM E1527-21 site assessments; `environmental-regulation-summaries` for governing-statute identification; `environmental-indemnity` and `environmental-covenant-and-easement` for risk-allocation drafting. - **Real estate subset** — `real-estate-transaction-summary` for property-transaction memos that include diligence; `title-commitment` for title-side review. - **Corporate subset** — `corporate-bylaws`, `articles-of-incorporation`, `pro-forma-cap-table` for governance review. - **Compliance subset** — `compliance-summaries` for cross-sector regulatory posture; `hipaa-baa` and related healthcare skills for HIPAA-regulated targets. - **Outputs** — `legal-memo` for substantive opinions arising from diligence findings; `engagement-letter-review` for scope confirmation upstream. ## Quick Start Gather before beginning: 1. **Transaction snapshot** — type, parties, structure, timeline, target entities 2. **Scope definition** — in/out-of-scope categories, materiality threshold, jurisdictions 3. **Data room index** — document list with stable IDs and dates 4. **Substantive materials** — governance docs, financials, contracts, IP schedules, litigation files, HR/benefits, real estate, tax, environmental records 5. **Privilege/confidentiality designation** and allowed audience ## Workflow 1. **Map scope to inventory** — mark each category Complete / Partial / Missing using the coverage checklist. 2. **Extract findings** — facts, obligations, restrictions, change-of-control and consent triggers. 3. **Classify** each finding as Fact, Representation, or Open Issue. 4. **Rate risk and materiality** — quantify exposure where possible. 5. **Flag conflicts** across sources; resolve by authority and date. 6. **Produce summary** using the deliverable template; cite every material finding as `[Doc ID or Title, date, page/section]`. ### Risk Scale | Rating | Meaning | Action | |--------|---------|--------| | High | Likely deal impact or material exposure | Escalate; require resolution/mitigation | | Medium | Manageable; needs diligence or contractual protection | Track; address in docs/price | | Low | Informational or minor exposure | Note; monitor if cumulative | ### Coverage Checklist | Category | Expected Core Docs | |----------|--------------------| | Corporate/Governance | Charter, bylaws, consents, cap table, subsidiary org | | Financials/Debt | Audited/unaudited FS, debt docs, guarantees, liens | | Contracts | Top customer/vendor, assignment/consent, exclusivity | | IP/Tech | IP schedule, licenses, OSS use, assignments | | Litigation/Reg | Docket list, claims history, agency letters | | HR/Benefits | Payroll, key employee agreements, benefits plans | | Real Estate/Assets | Leases, deeds, asset schedules | | Tax | Returns, audits, NOLs, nexus | | Environmental | Phase I ESA (ASTM E1527-21), Phase II reports, environmental permits (NPDES, Title V, RCRA), CERCLA / state cleanup status, environmental indemnity provisions, ECOAs, PFAS exposure, reportable historical releases | ## Deliverable Template ### Executive Summary - Deal snapshot (type, parties, target, valuation if known) - Top 5 red flags with risk rating and cited evidence - Missing critical items ### Scope & Coverage - In-scope categories and jurisdictions - Coverage checklist with gaps and rationale ### Key Findings by Category One table per category (Corporate/Governance, Financials/Debt, Contracts, IP/Tech, Litigation/Regulatory, HR/Benefits, Real Estate/Assets, Tax, Environmental): | Issue | Evidence | Risk | Materiality | Follow-up | |-------|----------|------|-------------|-----------| ### Conflicts & Discrepancies | Topic | Conflicting Sources | Assessment | Action | |-------|---------------------|------------|--------| ### Open Items / Follow-Up Requests | Item | Rationale | Requested From | Priority | |------|-----------|----------------|----------| ### Recommended Actions - Contractual protections (rep, warranty, indemnity, covenants) - Price or structure adjustments - Pre-closing conditions or consents ## Pitfalls & Checks - Separate confirmed facts from representations and open issues — never conflate. - Flag missing expected documents as findings with risk and impact. - Use exact dates, parties, dollar amounts, and governing law when available. - Label unsigned drafts as non-authoritative. - For regulated industries, add a compliance subsection (HIPAA, FDA, FINRA/SEC, OFAC, FCPA, state licensing); mark statutes `[VERIFY]` if uncertain. - Stay neutral and evidence-driven — do not advocate for or against the deal. - Preserve privilege and confidentiality; limit distribution as instructed. --- ## Troubleshooting - **Data room incomplete or actively being populated.** Mark each missing-document line as a finding (Risk: Medium-High depending on category) with a follow-up request. A summary built on a partial data room is signed only with explicit scope limitation in the Executive Summary. - **Source documents conflict (e.g., cap table vs. board consents).** Show both readings side-by-side with citations; flag for resolution by counsel. Do not silently reconcile by date — older documents may control where amendments aren't on file. - **Regulated-industry target without familiar compliance lens.** Engage industry-specific counsel; flag and rate Unknown-but-material rather than guessing. Examples: HIPAA covered-entity status; banking BSA/AML; broker-dealer registration. - **Environmental concerns surfaced but no Phase I in the data room.** Risk is Medium-to-High depending on industrial use history. Recommend a Phase I ESA per ASTM E1527-21 as a closing condition or pre-LOI step, and an environmental indemnity in the definitive agreement. - **Privilege risk on shared diligence.** When buyer's counsel and seller's counsel share substantive analysis, joint-defense / common-interest agreements are the usual mechanism. Note any unprivileged exchanges in the deliverable.