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M&A Due Diligence Reviewer

During the due diligence phase of any M&A transaction when reviewing data room documents.

Corporate

In M&A, the documents in the data room are where deals are won, repriced, or lost. A change-of-control clause that requires a third party's consent, a liability that survives closing, a key contract that cannot be assigned, any of these can reshape valuation or structure if caught early, or blow up a signing if caught late. Systematic diligence review turns a sprawling data room into an organized, risk-ranked issues list.

Claude is well suited to high-volume, pattern-driven diligence reading. Tell it the transaction type, the target, the document category, and the buyer's key concerns, and it summarizes each document's material terms, flags change-of-control and consent triggers, identifies surviving liabilities, suggests the representations and warranties needed to address each risk, and notes missing items, all organized by deal-critical, high, medium, and low. It is a cost-effective way to build the backbone of a diligence memo.

The review is an accelerant for your judgment, not a replacement for it. Deal-critical calls, valuation impact, and the negotiation strategy behind each representation all require experienced counsel, and you must verify every finding against the underlying documents. Use the output to triage the data room and feed your running issues list, but the diligence conclusions and the advice to the client remain yours. This is attorney work product to verify, not legal advice.

The Prompt

Review the following due diligence documents and identify issues:

Transaction type: [ASSET PURCHASE / STOCK PURCHASE / MERGER]
Target company: [INDUSTRY AND SIZE]
Document category: [e.g., material contracts, IP portfolio, employment agreements, litigation history]
Buyer's key concerns: [WHAT SPECIFIC RISKS IS THE BUYER MOST WORRIED ABOUT]

For each document reviewed, provide:
1. Summary of key terms and obligations
2. Risks to the buyer — change of control provisions, consent requirements, termination triggers
3. Liabilities that would transfer or survive closing
4. Representations and warranties needed to address identified risks
5. Items requiring seller disclosure or further investigation
6. Deal-critical issues that could affect valuation or structure
7. Missing documents that should be in the data room

Organize findings by risk level: DEAL-CRITICAL / HIGH / MEDIUM / LOW

Documents:
[PASTE OR DESCRIBE DOCUMENTS]

Example Output

A due diligence findings report organized by risk level with specific recommendations for purchase agreement protections.

Illustrative example — names, figures, and facts are fictional.

M&A DUE DILIGENCE FINDINGS
Transaction: Stock purchase of Northwind Logistics, Inc.
Target: regional freight brokerage, ~180 employees
Document category: Material contracts | Buyer's key concern: continuity of top customer relationships

FINDINGS BY RISK LEVEL

DEAL-CRITICAL
1. Top customer MSA (Apex Retail, ~22% of revenue) — Change of control permits Apex to terminate on 30 days' notice.
Action: Obtain Apex consent / reaffirmation as a closing condition; add a specific indemnity and consider a purchase-price holdback tied to retention.

2. Senior credit facility — Change of control is an event of default; accelerates ~$8.4M.
Action: Secure lender consent or payoff letter pre-closing; confirm prepayment penalties.

HIGH
3. Key carrier agreements (3) — Anti-assignment clauses require counterparty consent.
Action: List as required consents; track in the consents schedule; rep on no other material anti-assignment terms.

4. Founder employment agreement — Single-trigger change-of-control payout of $1.2M plus accelerated equity.
Action: Quantify in the funds-flow; negotiate retention package; rep on all CIC obligations.

MEDIUM
5. Office lease — Landlord consent required to assign; estoppel needed.
Action: Request estoppel and consent; confirm no rent reset on assignment.

6. Software/IT vendor contracts — Auto-renew with above-market pricing; no termination for convenience.
Action: Disclosure schedule; factor into post-closing cost model.

LOW
7. Routine NDAs and ordinary-course supply terms — standard; monitor only.

MISSING FROM DATA ROOM
- Schedule of all customer contracts >$250K; signed copies of two referenced amendments; current cap table.

Map each item to a purchase-agreement representation and the consents schedule.
Note: Parties and figures are illustrative. Verify every finding against the source documents before relying on it.

Tips

•Focus on change-of-control provisions — they can kill deals if key contracts require consent.
•Flag any contract with non-assignability clauses early in the process.
•Create a running issues list that maps findings to purchase agreement representations.

Frequently Asked Questions

When should I use the M&A due diligence reviewer?

Use it during the diligence phase when working through data room documents, material contracts, IP, employment agreements, litigation history, and similar categories. It is most valuable for triaging volume: quickly summarizing each document, surfacing change-of-control and consent issues, and building a risk-ranked issues list that feeds your diligence memo and purchase-agreement negotiation.

Can this replace attorney diligence review?

No. It is a first-pass aid that organizes documents and flags likely issues; the diligence conclusions and the responsibility for them remain with you. Deal-critical judgments, valuation impact, and representation strategy require experienced counsel, and AI can miss context or misread cross-references. Verify every finding against the underlying documents before advising the client.

How do I get the most useful diligence findings?

Specify the transaction structure (asset, stock, or merger), the target's industry and size, the document category under review, and the buyer's specific concerns so the tool prioritizes what matters most to your client. Provide the actual documents where possible, and ask it to map each finding to a purchase-agreement representation and a consents schedule for a ready-to-use issues list.

Is it ethical to upload data room documents to AI?

Proceed carefully and within the deal's confidentiality terms. Model Rule 1.6 and ABA Formal Opinion 512 require protecting confidential information and understanding a tool's data practices; data room materials are often subject to strict NDAs. Avoid consumer AI lacking adequate protections, use an enterprise or zero-retention configuration, and confirm that submitting the documents is permitted before doing so.

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