Module 1 · Chapter 3

Scoping the Exercise

No review reads everything. This chapter shows how a diligence team agrees in advance what it will cover and what it will leave out, and how the report says so.

≈ 11 min read 8-question test

In this chapter

  • Why every review agrees its scope before the reading starts
  • How the materiality line works, and when small matters still count
  • How to say no to extra work, and record what was left out

3.1Scope in one paragraph

Scope is the written list of what a diligence review covers. It names the legal areas, the countries, the money line below which the review stays silent, and the shape of the report. On Project Sunrise, Atlas agreed it with its lawyers, Blackwood & Steel, six days before the data room opened. Anything outside the scope is safely outside only if the report says so.

Key point

A review is defined by what it leaves out as much as by what it covers. Every exclusion must be deliberate, agreed with the client and written in the report. An exclusion nobody wrote down is a gap, not a choice.

EVERYTHING ABOUT THE TARGET every contract, filing and letter in the data room THE AGREED WORKSTREAMS nine legal areas · the rest goes to others THE MATERIALITY LINE €250,000 · three exceptions THE FINDINGS pattern · regulator · buyer's plans
How scope narrows a review: agreed workstreams first, then a money line, with three exceptions that let a small matter through.

Also in this chapter

  1. Why no review reads everything
  2. Three shapes of report
  3. The materiality line and its three exceptions
  4. The target decides which workstream leads
  5. Local counsel for Irish and Polish law
  6. The cut-off date
  7. When someone asks for more
  8. The report names what it left out
  9. Your job

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