dd-checklist

What this skill does

# 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:

| Item | Workstream | Priority | Status | Owner | Notes |
|------|-----------|----------|--------|-------|-------|
| QoE report | Financial | P0 | Pending | | |
| Customer interviews | Commercial | P0 | In Progress | | 3 of 10 complete |

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