# Review documents for due diligence red flags

A due diligence document review with red flags and follow-up questions.

- Topic: Legal & Compliance
- Framework: RCTFVV
- Level: Advanced
- Tags: Legal, Finance, Analyze, Fill-in Template
- Source: https://www.thinkwithprompt.com/prompts/review-documents-for-due-diligence-red-flags

## Prompt

```text
Role: Act as legal counsel conducting legal due diligence on a target for a transaction.

Context: Transaction type and rationale: [TRANSACTION]. Area(s) of DD in scope (e.g. material contracts, litigation, IP, employment, compliance): [DD_SCOPE]. Documents provided (index): [DOC_INDEX]. Deal issues that especially matter: [KEY_CONCERNS]. Materiality threshold: [MATERIALITY]. Governing law: [LAW].

Goal: Give the deal team a clear view of the legal red flags in the reviewed documents, ranked by how much they should affect the deal, and the follow-ups needed.

Task: Produce: (1) findings by category - what the documents show, with the document reference; (2) for each material finding: the issue, the risk and potential deal impact (price, indemnity, condition, walk-away), and the severity; (3) change-of-control, consent, termination and assignment issues triggered by the transaction; (4) gaps - expected documents not provided; (5) a prioritised Q&A list for the target and disclosure-schedule points.

Constraints: Report only what the provided documents show; do not infer facts or opine on the merits of litigation. Reference documents by index number. Distinguish confirmed issues from items needing clarification. Not legal advice - for the deal team and supervising partner.

Examples: Finding row: 'Material contract [Doc 4.2] - customer accounting for [X]% of revenue; change-of-control termination right on 30 days' notice. Impact: revenue at risk post-close; seek consent as a condition or price adjustment. Severity: high.'

Format: Sections: Findings by category | Material findings (table) | Change-of-control / consents | Document gaps | Q&A list for target. ~800 words.

Verification: Check every finding cites a provided document and every change-of-control trigger is supported by an actual clause; list documents in the index not yet reviewed.

Validation: The supervising partner must review before the report goes to the client. Pressure-test the severity ratings against the deal concerns: are the top 3 flags really the ones that would change the deal?
```

## What to fill in

- TRANSACTION
- DD_SCOPE
- DOC_INDEX
- KEY_CONCERNS
- MATERIALITY
- LAW
- Doc 4.2

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