Write a quality-of-earnings due diligence request list for an acquisition
A prioritized document and data request list for buy-side financial diligence, focused on quality of earnings.
The prompt
Help me prepare the financial due diligence request list for an acquisition we are evaluating.
Target: [industry, size, business model, ownership]
Deal rationale: [why we are buying]
Valuation basis: [e.g. "multiple of adjusted EBITDA", "ARR multiple"]
Known concerns: [e.g. customer concentration, recent margin jump, founder-dependent sales]
Timeline and diligence team: [DETAILS]
Cover:
1. Quality of earnings: monthly P&L for 3 years, management adjustments with support, one-off items, owner-related costs, revenue recognition policies.
2. Revenue: customer-level revenue, contracts, churn, backlog, pricing changes, concentration.
3. Net working capital: monthly balances, seasonality, aging, inventory reserves, to set a working capital peg.
4. Net debt and debt-like items: leases, deferred revenue, unpaid bonuses, earn-outs, tax exposures.
5. Costs: headcount census, compensation, key vendors, capex history.
6. Tax, systems, and controls at a high level.
Return:
- A request list table: # | Area | Request | Why it matters | Priority (must / should / nice) | Requested date.
- The 10 questions for management interviews.
- Red flags to watch for in the answers.
- A list of items to hand to legal, tax, and commercial diligence.
This is a working checklist; engage qualified diligence advisors for material transactions.
Highlighted [brackets] are blanks to replace with your own details.
Fill in the blanks and use this promptMore Finance & Accounting prompts
What to fill in
- industry, size, business model, ownership
- why we are buying
- e.g. "multiple of adjusted EBITDA", "ARR multiple"
- DETAILS
How this prompt is built
This prompt follows the Few-Shot structure (Few-shot prompting). A few-shot prompt includes one or more worked examples of the input and the output you want, so the model can copy the pattern instead of guessing it.
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