Dd Checklist

Due Diligence Checklist

Workflow

Step 1: Scope the Diligence

Ask the user for:

• Target company: Name, sector, business model

• Deal type: Platform acquisition, add-on, growth equity, recap, carve-out

• Deal size / complexity: Determines depth of diligence

• Key concerns: Any known issues to prioritize (customer concentration, regulatory, environmental, etc.)

• Timeline: When is LOI / close targeted?

Step 2: Generate Workstream Checklists

Generate a checklist across all major workstreams, tailored to the sector:

Financial Due Diligence

• Quality of earnings (QoE) — revenue and EBITDA adjustments

• Working capital analysis — normalized vs. actual

• Debt and debt-like items

• Capital expenditure (maintenance vs. growth)

• Tax structure and exposure

• Audit history and accounting policies

• Pro forma adjustments (run-rate, synergies)

Commercial Due Diligence

• Market size and growth (TAM/SAM/SOM)

• Competitive positioning and market share

• Customer analysis — concentration, retention, NPS

• Pricing power and contract structure

• Sales pipeline and backlog

• Go-to-market effectiveness

Legal Due Diligence

• Corporate structure and org chart

• Material contracts (customer, supplier, partnership)

• Litigation history and pending claims

• IP portfolio and protection

• Regulatory compliance

• Employment agreements and non-competes

Operational Due Diligence

• Management team assessment

• Organizational structure and key person risk

• IT systems and infrastructure

• Supply chain and vendor dependencies

• Facilities and real estate

• Insurance coverage

HR / People Due Diligence

• Org chart and headcount trends

• Compensation benchmarking

• Benefits and pension obligations

• Key employee retention risk

• Culture assessment

• Union/labor agreements

IT / Technology Due Diligence (for tech-enabled businesses)

• Technology stack and architecture

• Technical debt assessment

• Cybersecurity posture

• Data privacy compliance (GDPR, CCPA, SOC2)

• Product roadmap and R&D spend

• Scalability assessment

Environmental / ESG (where applicable)

• Environmental liabilities

• Regulatory compliance history

• ESG risks and opportunities

Step 3: Status Tracking

For each item, track:

Status options: Not Started → Requested → Received → In Review → Complete → Red Flag

Step 4: Red Flag Summary

Maintain a running list of red flags discovered during diligence:

• What was found

• Which workstream

• Severity (deal-breaker / significant / manageable)

• Mitigant or path to resolution

• Impact on valuation or deal terms

Step 5: Output

• Excel workbook with tabs per workstream (default)

• Summary dashboard: % complete by workstream, outstanding items, red flags

• Weekly status update format for deal team

Sector-Specific Additions

Automatically add relevant items based on sector:

• Software/SaaS: ARR quality, cohort analysis, hosting costs, SOC2

• Healthcare: Regulatory approvals, reimbursement risk, payor mix

• Industrial: Equipment condition, environmental remediation, safety record

• Financial services: Regulatory capital, compliance history, credit quality

• Consumer: Brand health, channel mix, seasonality, inventory management

Important Notes

• Prioritize P0 items that are gating to LOI or close

• Flag items where the seller is slow to respond — may indicate issues

• Cross-reference data room contents against the checklist to identify gaps

• Update the checklist as diligence progresses — it's a living document