Due diligence is not designed to kill a deal; it is designed to price it correctly. Most of what surfaces does not cancel a transaction — it changes the price, the warranties or the payment structure.
- Revenue concentrated in a single client or a terminable contract.
- Earnings resting on non-recurring items classified as operating.
- Abnormal working capital movements in the months preceding the deal.
- Related-party transactions priced off-market.
- Undisclosed contingent liabilities: litigation, penalties, end-of-service accruals.
- A gap between accounting profit and cash actually collected.
- Accounting policies changed during the review period without operational justification.
