Transactional Legal Due Diligence

Transactional Legal Due Diligence

Build a reviewable, source-cited legal due diligence record for a proposed acquisition. The skill organizes evidence and open items; counsel determines scope, materiality, legal advice, and transaction response.

Safety and authority

• Treat all matter documents as confidential. Do not upload, transmit, or quote them to an external service unless the user authorizes that destination.
• Do not characterize work product as privileged merely because a template says so. Preserve labels supplied by counsel and let counsel decide privilege.
• Do not run a public-record search, contact management, send a diligence request, or modify a tracker without authorization. A requested report does not itself authorize those external actions.
• Do not state that a search was run, a call occurred, or a document was reviewed unless the record proves it.
• Separate extracted fact, legal benchmark, analysis, commercial consequence, recommendation, and unresolved question. The reviewing lawyer owns the final legal and deal judgment.

Start with the transaction, not a generic checklist

Before reviewing, establish from supplied evidence or ask for:

• buyer, target, seller, and the exact entities or assets in scope;
• proposed structure, signing and closing posture, and relevant jurisdictions;
• materiality thresholds and priority contracts, facilities, people, products, permits, and regulatory regimes;
• available repositories, index or folder map, Q&A tracker, management-session records, public-search results, and the report cutoff date;
• requested output, citation convention, risk taxonomy, and review owners.

Unknown items remain Unknown or Not provided. Never infer that a deal is a stock purchase, asset purchase, or merger from the mere existence of diligence.

Build the evidence ledger first

Create an internal ledger before drafting conclusions. Each reviewed item needs:

1. stable source identifier and repository path;
2. document title, parties, execution and effective dates, and version status;
3. pinpoint location for each extracted fact or clause;
4. relationship to amendments, exhibits, schedules, incorporated terms, and referenced-but-missing material;
5. reviewer status and the date through which the record is current.

Use addressable citations such as:

• [Doc: Commercial / Customer-017.pdf, § 12.4]
• [Diligence Q&A: Item 42, response dated 2026-08-20]
• [Management Session: Operations (2026-08-21), 00:31:14]
• [Public Record: Delaware UCC, filing 2025-1234567]
• [DATA GAP: Schedule 3.14 referenced in SPA draft; not provided as of 2026-08-24]

Adapt the syntax to the user's system, but keep source identities stable. A folder name alone is not a pinpoint. A management assertion does not become documentary evidence merely because it appears in a call transcript.

Select and route review areas

Read references/review-areas.md. Select areas based on the transaction structure, target operations, materiality thresholds, and the actual corpus. Do not force every matter through every category.

Corporate/entity and transaction-structure review is the spine: reconcile what exists, who owns it, what is being acquired, which approvals are required, and which obligations survive or move. Route specialist issues to qualified review instead of converting a general diligence report into unsupported tax, environmental, benefits, antitrust, healthcare, or other specialist advice.

The review-area file is intentionally modular. New categories may be added there without rewriting this workflow, provided each category states its trigger, questions, expected evidence, outputs, and escalation boundary.

Review in passes

1. Corpus integrity

• inventory documents and compare the repository to indices, request lists, and references inside documents;
• detect duplicates, drafts, unsigned copies, broken amendment chains, missing exhibits, and inconsistent entity names;
• log every material gap with the request channel and cutoff date when known.

2. Corporate and structural reconciliation

• reconcile legal names, entity types, jurisdictions, good-standing evidence, organizational documents, subsidiaries, capitalization, securities, options, warrants, and ownership records;
• distinguish seller-retained assets and services from target-owned assets;
• map required board, equityholder, lender, counterparty, regulatory, and other approvals to signing, closing, or post-closing action;
• compare the proposed structure against transfer, succession, assignment, and change-of-control mechanics found in the evidence.

3. Specialist and contract review

Apply only the activated review areas. For material agreements, distinguish an assignment restriction from an express change-of-control provision; do not treat silence as consent. Capture term, renewal, termination, exclusivity, minimums, pricing protections, indemnity, liability limits, IP/data rights, audit rights, governing law, dispute terms, and transaction-triggered notice or consent.

Trace amendments chronologically and state which provision controls. If the complete agreement set is unavailable, qualify the conclusion and log the gap.

4. Reconciliation and follow-up

Cross-check representations across contracts, schedules, cap tables, management responses, public records, financial or operational schedules supplied for legal review, and specialist reports. Record contradictions; do not silently choose the most convenient source. Convert unresolved issues into specific requests stating what is missing and why it matters.

Apply legal benchmarks carefully

• Verify current law from primary sources before stating a legal requirement.
• Record jurisdiction, effective date, applicability conditions, exceptions, and the source URL or citation.
• Do not apply a statute merely because a document mentions the same subject.
• Treat market practice as distinct from law and identify the basis for any market benchmark.
• For U.S. restrictive-covenant law, use the separately published open-agreements/open-agreements@non-compete-contract-explainer when available.
• When facts or jurisdiction are insufficient, state the dependency and route the point to counsel instead of manufacturing a conclusion.

Classify findings without overstating them

For each finding, state:

• concise title and activated review area;
• evidence-backed fact and pinpoint citation;
• applicable contract mechanism or verified legal benchmark;
• why it matters to this transaction structure;
• status: confirmed, contradictory, incomplete, or pending specialist review;
• possible response category, framed as an option for counsel: structure, consent/notice, closing condition, covenant, purchase-price mechanism, indemnity/escrow, remediation, integration item, or acceptance;
• owner, next action, and timing if the user supplied them.

Do not assign dollar exposure, probability, severity, or insurance coverage without a stated method and supporting evidence.

Produce the report

Read references/report-template.md. Adapt the selected review-area modules rather than retaining empty boilerplate sections. Every substantive report entry needs an evidence citation or an explicit data-gap marker.

Before delivery, verify:

• entity and transaction descriptions match the evidence;
• every conclusion is traceable to the ledger;
• assignment and change-of-control concepts are not conflated;
• missing schedules, exhibits, amendments, and referenced agreements are logged;
• specialist limitations are visible where the report raises specialist issues;
• scope lists only repositories, sessions, searches, and dates actually reviewed;
• report language distinguishes fact, law, analysis, and proposed response;
• placeholders and unsupported generic statements have been removed.

References

• Review-area modules
• Report template
• OpenAgreements legal due diligence practice guide