due-diligence

/due-diligence — Due Diligence Checklist

What This Command Does

Generates and executes a comprehensive due diligence checklist tailored to the deal type and target. Covers financial, commercial, legal, operational, tax, and HR workstreams. Tracks findings, flags red flags, and produces a summary of key risks and deal-breakers.

When to Use

• Buy-side M&A due diligence
• Sell-side vendor due diligence preparation
• Private equity investment evaluation
• Venture capital deep-dive on a target
• Joint venture partner assessment
• Post-LOI / pre-closing analysis

How It Works

1. Scoping: Determines relevant DD workstreams based on deal type, industry, and jurisdiction
2. Checklist Generation: Creates a prioritized checklist per workstream with data request items
3. Analysis Execution: Works through available information, documenting findings per item
4. Red Flag Identification: Highlights material findings that could affect deal terms or viability
5. Quality of Earnings: Adjusts reported earnings for non-recurring items, accounting policy differences, and normalization
6. Risk Matrix: Maps findings to a risk severity matrix (critical / major / minor / observation)
7. Summary Report: Consolidates findings into an executive summary with recommended actions

Example Usage

Input:

/due-diligence target:"LogiFreight SpA" type:financial deal_type:acquisition

Output:

# Financial Due Diligence — LogiFreight SpA
## Status: In Progress | Deal Type: Acquisition | Jurisdiction: Italy (OIC/IFRS)

━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
## 1. QUALITY OF EARNINGS
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

| Item                           | Status | Finding                              | Severity |
|--------------------------------|--------|--------------------------------------|----------|
| Revenue recognition policies   | ✓ Done | Revenue recognized at delivery — OK  | —        |
| Non-recurring items            | ✓ Done | EUR 1.2M one-time gain in 2025      | ⚠ Major  |
| Related party transactions     | ✓ Done | Management co. charges EUR 400K/yr  | ⚠ Major  |
| Working capital normalization  | ✓ Done | Seasonal spike inflates YE position | ⚡ Minor  |
| Accounting policy consistency  | ✓ Done | Changed depreciation method in 2024 | ⚡ Minor  |

### Adjusted EBITDA Bridge
| EUR '000                       | Amount  |
|--------------------------------|---------|
| Reported EBITDA (2025)         | 8,500   |
| Less: One-time gain            | (1,200) |
| Less: Above-market mgmt fees  | (200)   |
| Plus: Below-market rent adj.   | 150     |
| **Normalized EBITDA**          | **7,250** |

━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
## 2. BALANCE SHEET REVIEW
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

| Item                    | Status | Finding                          | Severity   |
|-------------------------|--------|----------------------------------|------------|
| Net debt verification   | ✓ Done | Off-BS lease liabilities found   | 🔴 Critical |
| Receivables quality     | ✓ Done | 12% of AR > 90 days overdue     | ⚠ Major    |
| Inventory valuation     | ✓ Done | FIFO applied consistently        | —          |
| Contingent liabilities  | ✓ Done | Pending labor dispute EUR 300K   | ⚡ Minor    |
| Tax liabilities review  | ⬜ Open | Awaiting tax audit results       | TBD        |

━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
## 3. RED FLAGS
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

🔴 CRITICAL: Off-balance sheet operating leases of EUR 3.5M not captured
   in reported net debt. Adjusts EV by EUR 3.5M.

⚠ MAJOR: Normalized EBITDA 14.7% below reported — affects valuation
   multiple application.

⚠ MAJOR: Related party management fees above market rate suggest
   potential value leakage.

━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
## 4. RECOMMENDED ACTIONS
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

1. Adjust purchase price to reflect normalized EBITDA (EUR 7.25M vs EUR 8.5M)
2. Include off-BS leases in enterprise value bridge
3. Negotiate termination of related party management agreement at closing
4. Request completion of open tax audit before signing
5. Include AR warranty for receivables > 90 days in SPA

### Overall Assessment: PROCEED WITH CAUTION
Material adjustments required to deal terms. No deal-breakers identified
if price reflects normalized earnings and off-BS liabilities.