M&A Diligence

Version: 1.1

Last Updated: July 30, 2026

The M&A Diligence protocol analyzes due diligence materials and management interviews to assess acquisition risks, identify deal breakers, quantify synergies, structure deal terms, and generate investment recommendations with evidence-backed confidence scores.

Table of Contents

1. What M&A Diligence Does

Purpose

M&A Diligence answers the critical question: "Should we do this deal, and what risks should we know about?"

Unlike traditional diligence checklists, the M&A protocol cross-references findings across multiple data sources — financial records, management interviews, operational assessments, and prior VuduVations analyses — to build a complete risk picture with quantified value creation opportunities.

It identifies:

Who Should Use It

What You'll Get

2. Preparing Your Input

Ideal Input: Management Presentations & Interviews

The best input combines management presentations with interview transcripts.

Interview Guide Template

For management interviews, cover:

Business Model (15 min):

Operations (15 min):

Risks (15 min):

Synergies (10 min):

Input Quality Checklist

Good Input:

Weak Input:

Tip: The M&A protocol produces the richest results when it can cross-reference findings from other VuduVations protocols. Running Key Person Audit and Sales Intel on the same target first provides the M&A protocol with dependency scores, deal intelligence, and operational data to inform its assessment.

3. Running an Analysis

Step 1: Access M&A Diligence

From the Run Analysis page, click the M&A protocol tab.

Step 2: Upload Your Input

Upload documents and/or transcripts:

Step 3: Run Analysis

4. Deal Overview & Structure

The M&A results begin with a deal overview showing the acquirer profile and key deal metrics.

Acquirer Profile

Deal Metrics

Cross-Reference Intelligence

The M&A protocol pulls findings from prior VuduVations analyses on the same target:

5. Due Diligence Assessment

The Due Diligence Assessment evaluates the target across 6 key areas, each with a risk level and completion percentage.

Assessment Areas

Risk Level Guide

Each assessment area links back to the VuduVations protocol that generated its data (e.g., "Data from Chapter 3" for operational findings from Workflow Transform).

6. Due Diligence Scorecard

The Diligence Scorecard provides a single overall score with breakdown across 5 key metrics, used by the buyer to assess deal readiness.

Overall Score

The scorecard displays a 0-100 overall score (higher is better — measures deal readiness, not risk).

Scorecard Metrics

Tip: The scorecard is what PE buyers use to justify their valuation. An overall score above 75 typically supports full asking price; below 60 triggers earnout structures or price reductions.

7. Risk Matrix

The Risk Matrix identifies and ranks all material risks by impact severity and probability.

Identified Risks

How to Read the Matrix

8. Value Creation Thesis

The Value Creation Thesis quantifies the upside potential, showing specific initiatives with dollar values and cross-references to supporting data.

Value Creation Initiatives

Total Value Creation Potential: **+$19.15M**

Why this matters: The value creation thesis is what PE firms present to their investment committee. Each initiative traces back to evidence from prior VuduVations analyses, making the case data-backed rather than aspirational.

9. Deal Terms & Earnout Gates

The Deal Terms section shows the proposed deal structure and performance-based milestones.

Proposed Deal Terms

Deal Structure Breakdown

Earnout Gates

Performance-based milestones that unlock additional consideration:

Tip: Earnout gates are directly tied to risks identified in the Risk Matrix. The Owner Dependency risk maps to the "Dependency < 30%" gate; the Customer Concentration risk maps to the "Customer retention > 90%" gate.

10. Protocol Recommendation

The M&A Protocol delivers a clear investment recommendation with supporting rationale.

Recommendation Outcomes

Example Recommendation

11. Due Diligence Findings

The Findings section summarizes key observations split into two categories.

Positive Indicators

Evidence supporting the investment thesis:

Areas to Monitor

Items requiring ongoing attention post-close:

12. Exporting Results

Available Formats

PDF Report Contents

How to Export

From the Results Page:

From My Analyses:

13. Best Practices

Getting Better Results

Red Flags to Watch

Using Your Results

Quick Reference

Due Diligence Assessment Areas

Scorecard Metrics

Risk Matrix Interpretation

Related Documentation

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