Module 1 · Chapter 2

The Cast and the Setup

A due diligence review is run by two teams that talk through one formal channel. Two documents set its rules before anyone reads a page: a confidentiality agreement and an engagement letter.

≈ 11 min read 8-question test

In this chapter

  • Who sits on each side of a review, and how the two sides talk
  • What the confidentiality agreement and the engagement letter fix
  • Who may rely on the report, and why it is shared so narrowly

2.1Two teams and one channel

A due diligence review is run by two teams. The buyer's team investigates: it asks the questions, reads the documents and decides what matters. The seller's team answers: it chooses what to disclose, drafts the replies and sets the pace.

Everything passes between the two teams through one formal channel. Documents go into the data room, an online library of the target's papers that the seller's side builds. Questions go through the Q&A, a written log of questions and answers.

Key point

Nothing passes between the teams except through the data room and the Q&A. That keeps every document and answer on the record. Later, either side can prove what was disclosed, and when.

Also in this chapter

  1. The buyer's team: who reads what
  2. The seller's team: who answers
  3. The confidentiality agreement comes first
  4. The engagement letter sets the shape of the review
  5. Who may rely on the report
  6. Keeping the report privileged
  7. Your job

Preview

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