Due diligence is the stage where the deal must prove its claims. The objective is not to collect the largest folder of documents; it is to connect every material assumption to evidence, quantify what remains uncertain and convert unresolved risks into price, conditions or a no-go decision.
Build a claim-to-evidence matrix
For each claim—ownership, revenue, licence, customer retention, buildable area, equipment capacity, tax compliance—record the evidence requested, source, date, reviewer and status. “Not provided” must remain unresolved; it should never silently become an assumption of compliance.
Corporate, legal and ownership review
Confirm the exact counterparty, beneficial ownership, authority to sign, share/asset title, liens/encumbrances, material contracts, litigation and transfer restrictions. For property and land, connect registry status, zoning and permits to the exact parcel/unit. For regulated operations, verify that critical licences survive the transaction or can be reissued.
Financial and commercial quality of earnings
Reconcile reported revenue to bank movements, invoices, tax/accounting records and major customer contracts where appropriate. Normalise one-off income/cost, owner expenses, related-party transactions and under/over-market rent. Test customer/supplier concentration, backlog, churn and working-capital seasonality before valuing EBITDA.
Technical and operational diligence
For factories/assets, inspect equipment condition, capacity, maintenance backlog, energy, environmental compliance, inventory quality and capex required after closing. For developments, verify construction progress, permits, contractor exposure and remaining cost to complete. For software, test IP ownership, architecture, cybersecurity, cloud cost and key-person dependency.
Convert findings into the deal terms
Classify issues as resolved, price adjustment, warranty/indemnity, escrow/holdback, condition precedent or walk-away. Re-run valuation and downside cash flow after diligence. The final investment memo should show what was verified, what remains uncertain and who owns each residual risk after closing.
Use the research in a decision
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Official source and review
Editorial review: 11 September 2026. Verify transaction-specific legal, tax, licensing and incentive conditions at the date of execution.