1---2name: due-diligence-report3description: Produces U.S. corporate/M&A due diligence reports summarizing legal risks across corporate records, contracts, liabilities, regulatory compliance, and IP. Use when drafting a diligence report, red flags memo, or legal risk summary for acquisitions, asset purchases, minority investments, or financing. Trigger keywords: due diligence, diligence report, red flags, M&A, acquisition, target review, HSR, CFIUS, reps and warranties, indemnity.4---56# Due Diligence Report78Deliver a structured legal risk report that supports deal decisions and negotiation strategy.910## Prerequisites11121. **Transaction overview** — structure, parties, valuation, timeline, governing law, closing conditions.132. **Data room index** — document list with dates, versions, and confidentiality labels.143. **Diligence scope** — materiality thresholds (revenue %, dollar threshold, key customers).154. **Deal sensitivities** — regulatory approvals, IP dependencies, key contracts, employee retention.165. **Prior work product** — existing diligence memos or red-flag lists, if any.1718## Output Structure / Process1920### 1) Report Sections21221. Executive summary — top 5–10 risks, required approvals, open items.232. Risk rating framework.243. Findings matrix (issue-level table).254. Area analyses: Corporate/Cap Table, Material Contracts, Litigation/Claims, Regulatory/Compliance, IP/Technology, Employment/Benefits, Real Estate/Leases, Taxes, Data Privacy/Cybersecurity, Environmental, Insurance, Other as applicable.265. Open items and follow-up requests.276. Deal protections and drafting recommendations.2829### 2) Risk Ratings3031| Rating | Definition | Deal Impact |32|---|---|---|33| Critical | Likely deal-breaker or closing condition | Resolve pre-close or terminate |34| Significant | Material value/operations impact | Address with price, reps, indemnity, escrow |35| Moderate | Manageable risk | Address with covenants or post-close plan |36| Minor | Low impact | Note for awareness |3738### 3) Findings Matrix Template3940| Area | Issue | Source (Doc/§/Date) | Risk | Exposure/Impact | Recommendation | Proposed Deal Protection |41|---|---|---|---|---|---|---|4243### 4) Area Checklist4445| Area | Required Checks |46|---|---|47| Corporate/Cap Table | Formation docs; charter/bylaws; equity issuances; options/RSUs; board/stockholder approvals; subsidiaries; liens |48| Material Contracts | Change-of-control; assignment; exclusivity; MFN; termination; renewals; pricing; SLAs; non-compete; key customer/supplier concentration |49| Litigation/Claims | Pending/threatened claims; settlements; subpoenas; arbitration; investigations |50| Regulatory/Compliance | Licenses/permits; sanctions/export; antitrust/HSR; CFIUS; industry regulators; SEC/FINRA if applicable |51| IP/Technology | Chain of title; employee/contractor assignment; OSS compliance; licenses in/out; infringement claims; domains |52| Employment/Benefits | Key employee agreements; non-solicit; wage/hour claims; benefits plans; 401(k); union matters |53| Taxes | Returns; audits; NOLs; sales/use tax; transfer pricing; tax sharing agreements |54| Privacy/Cybersecurity | Privacy policies; DPAs; breach history; security audits; data localization; HIPAA/GLBA/FERPA if applicable |55| Real Estate | Leases; environmental reports; zoning; landlord consent |56| Environmental | Permits; contamination; remediation obligations; indemnities |57| Insurance | Coverage types; exclusions; claims history; tail coverage |5859### 5) Executive Summary Template6061```text62Executive Summary63- Critical risks: [Issue | Impact | Required action]64- Significant risks: [Issue | Impact | Proposed deal protection]65- Required approvals: [HSR/CFIUS/Industry/Other]66- Open items: [Missing docs or confirmations]67```6869### 6) Deal Protections Mapping7071| Risk Type | Drafting Lever |72|---|---|73| Known liability | Specific indemnity; escrow; special rep |74| Compliance gap | Pre-close covenant; condition to close |75| Contract consent | Closing condition; bring-down |76| IP ownership gap | Assignment; rep; escrow holdback |77| Litigation exposure | Litigation rep; cap; survival term |7879### 7) Citation Format8081- Quote only material clauses; cite as `DocName §X (Date)`.82- Flag missing or inconsistent documents in the open items section.8384## Guidelines8586- Maintain neutral, risk-focused tone; avoid advocacy.87- Tie each issue to evidence and transaction impact.88- Use `[VERIFY]` for any legal citation or regulatory threshold not confirmed.89- Assume U.S. transaction unless specified; call out non-U.S. jurisdictions explicitly.90- Separate factual findings from recommendations.91- Do not invent documents or confirm approvals without evidence.
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