Due diligence inspires dread in buyers and sellers alike. If a buyer misses something important, it could eat into their returns. Sellers worry a surprising discovery could tank their deal. Both must tackle a mountain of due diligence tasks and documents to protect their interests.
With emotions running high and countless points of failure, 60 percent of deals fail due to inadequate due diligence. But must it always be this way?
Much of the anxiety around due diligence is a fear of the unknown. What questions should you ask? How should you track and document the process? What happens if you discover something surprising? If you knew the answers, due diligence wouldn’t be so scary – and it would mean closing much faster.
After months of testing, we’ve launched an AI-powered due diligence task manager to standardize the process and eliminate uncertainty. Combining a due diligence framework and intelligent task creator, it generates a customized, step-by-step action plan based on the listing, offer, and business type.
See how it works below.
Vanquishing the Deal Killer
One of the biggest deal killers is uncertainty. And nowhere are things more uncertain than in due diligence. Every buyer, seller, and startup is different, and without knowing where to start, acquisitions slow down and inefficiency creeps in, driving deals off course.
But isn’t due diligence a well-known part of the M&A process? Yes, but competing interests and a lack of (or mis-) understanding of how it works can cause delays and communication breakdowns. Around a third of Acquire.com listings with accepted offers don’t reach the APA stage, for example.
Why the Uncertainty?
Buyers often lack the tools and guidance to accurately evaluate acquisition targets, leading to cold feet. Those who forge ahead anyway can discover nasty surprises post-acquisition that cost significant time and money to resolve. In either case, opportunity is lost or returns squashed.
Sellers, on the other hand, don’t always know what documents to prepare or evidence to share. Some feel so intimidated by the process, they stall or put buyers off ever acquiring their company. Due diligence can feel invasive, even combative, when misunderstood, burning through goodwill.
By standardizing the due diligence process, we hope to keep buyers and sellers working collaboratively. We’ve trained the absolute best-in-class AI technology (that will only get better with each new iteration and use of the model) to eliminate due diligence friction and help more startups get acquired.
Due Diligence Made Easy
The due diligence task manager might look like a checklist, but it’s also a transparent framework that helps you overcome obstacles to closing. Generating tasks is automatic and based on thousands of successful deals, saving weeks of stressful back and forth.
Automates Away Uncertainty
When a seller accepts a letter of intent (LOI), our platform connects to ChatGPT via an API, anonymously feeding data about your acquisition. The listing, offer, and business type go into the prompt, producing a checklist of due diligence tasks with due dates, statuses, and owners (the seller is the default owner).
Customized to Your Acquisition
The more data and documents in the listing, the more comprehensive, tailored, and accurate the due diligence tasks will be. A SaaS company, for example, will get a different set of due diligence tasks than an ecommerce business. Tasks will also be auto-grouped into relevant categories for easy tracking.
Transparent, Simple Process
As you progress through due diligence, you can update the status of each task, add new ones, upload docs, chat, and more. We designed the task manager to be collaborative and comprehensive, but please refer to each task and ensure it fits your acquisition – and that nothing is missing.
How to Get the Most From the Task Manager
1. Review tasks
Due diligence tasks are generated once the seller accepts an LOI. First, check the list of due diligence tasks to ensure they’re relevant and appropriate for your acquisition. Delete any tasks that are superfluous to your deal, but note that this will be visible to the other party in your transaction.
2. Add Tasks (As Necessary)
Adding to the due diligence task list is easy. Enter the task title, description, status, due date, and owner. You can also add a message to the owner if you like. When you create a new task, we’ll notify the other person in your acquisition, whether that’s a buyer, seller, or M&A advisor, to keep them informed of changes.
3. Update Task Progress
As you tackle and complete due diligence tasks, update their status. This will also trigger notifications to the other person in your acquisition. If notifications get a little heavy, feel free to turn them off in your settings but remember to communicate important changes or updates via the chat.
4. Ask For Help If Stuck
Documents can go missing or contain errors, so if you encounter problems completing due diligence tasks, speak to the other person rather than ignore the issue. Your friendly Acquire.com M&A advisor can also step in to resolve due diligence issues before they become obstacles to your acquisition.
5. Get on a Pre-APA Call
Finally, with all due diligence tasks complete, you’re ready to sign an APA. Before rushing into the penultimate stage of your acquisition, get on a call with the buyer or seller to tie up loose ends. When you’re both comfortable with the price and terms, sign the APA and move to escrow.
Want More Hands-On Support?
Although the due diligence task manager should save you time, it won’t fit every deal and acquirer. Some acquisitions need a bit more hands-on support. If you’d rather outsource due diligence to an expert provider, we can offer full-spectrum due diligence services through our partner, Centurica.
With decades of due diligence experience across thousands of deals, Centurica is a popular choice for busy acquirers who’d rather delegate due diligence than manage it themselves. For more information, please email support@acquire.com.
Make Yours a Stress-Free Acquisition
Due diligence has been on our hit list for a while. With the introduction of the due diligence task manager, we hope you’ll find the process easier. You’ll at least gain the confidence to make or accept offers knowing the next stage of your deal won’t be so scary. In time, we hope that leads to better exits, investments, and new ventures as we continue to streamline the acquisition process for you.
Does the task manager do due diligence for me?
No, it creates a due diligence framework and task list based on the specifics of your acquisition. That way, you and the other party to your transaction can work together to clear a path to closing. Like any AI-powered tool, the task manager is only as good as the data you give it, so we recommend using it as a guide rather than a definitive set of actions. Always check the results are relevant to your deal.
How is the task manager “artificially intelligent”?
We trained OpenAI’s large language model (LLM), ChatGPT, to generate due diligence tasks based on past acquisitions. When you accept an LOI, the task manager anonymously shares details about your acquisition with ChatGPT (via an API). We then feed the results to your acquisition as an editable, fully customized checklist, which you can use to guide you through the due diligence process.
Can I skip the due diligence task manager?
Yes, you can do due diligence without using the task manager. However, even if you’re a due diligence expert, for the sake of transparency, the task manager is still a good way to manage the process. By setting transparent expectations, everyone knows where they stand, accelerating progress.
What should I do if a task owner doesn’t complete their task?
Speak to the person responsible for completing the task. Chances are, they’ve not had time to finish it yet, and if so, you can extend the deadline. If someone refuses to complete a task, first consider whether it’s a reasonable objection. You might then edit or remove the task in question. Otherwise, proceed with caution. Refusing to commit to due diligence is a major red flag.
Can I adjust my task notification settings?
Yes, it only takes a few seconds. Head to your notification settings (profile -> settings -> notifications) to switch them on or off or change the medium (email or in-app).
The content on this site is not intended to provide legal, financial or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional before entering into any M&A transaction. It is not Acquire’s intention to solicit or interfere with any established relationship you may have with any M&A professional.