Search fund due diligence with a controlled data room
A search fund needs to turn a promising acquisition into an evidence-based investment decision while coordinating investors, lenders and advisors. Acquisitions provides a permissioned data room, AI review of financials and contracts, and an exportable red flag report. Keep the target's records organized and make it clear which questions still need an answer before you commit.
Focus diligence on the business you plan to operate
The search phase develops an investment thesis. Transaction diligence tests whether a particular business actually fits it. A strong headline earnings figure does not establish customer durability, management continuity or the working capital needed after closing. The review needs to examine the operating assumptions behind the price and the financing plan.
Start with the questions that could change your decision. Which customer relationships are essential, what work does the owner perform, and what costs transfer with the business? Ask advisors to define the evidence required in their areas. A disciplined scope keeps the room connected to the acquisition case rather than turning it into an archive nobody fully reviews.
Give the target a request process it can understand
An owner-operated business may have records spread across accounting files, contract folders and informal explanations. Request financial, legal, commercial, tax, HR and IT materials in clear groups. Identify the entity and period you need. Ask the seller to distinguish documents that exist from information that requires preparation.
Set up the virtual data room with folders that reflect those workstreams. Separate forecasts from historical accounts and signed contracts from templates. Keep missing evidence visible as a question. A seller's willingness to help matters, but it does not substitute for the reconciliation, executed agreement or other support needed to reach a conclusion.
- Define the transaction perimeter before interpreting the accounts.
- Request evidence for customer, earnings and continuity assumptions.
- Restrict employee and other sensitive records to appropriate reviewers.
- Keep follow-up requests specific enough for the seller to answer.
Test the earnings that fund the acquisition
For a searcher who intends to operate the target, sustainable earnings and cash requirements affect both price and the transition plan. Review owner compensation, recurring expenses, working capital and the cash timing of customer payments. Ask what changes when you replace the owner's role and which costs remain necessary.
Acquisitions reviews financial documents for potential red flags that your accountant can investigate. A flagged expense or reporting inconsistency is a question, not a final adjustment. Use financial due diligence and the quality of earnings report guide to prepare the financial advisor's scope. Reconcile assumptions with the underlying records before carrying them into the model.
Understand the rights and obligations you inherit
Customer renewals, supplier commitments, property leases and employment terms can influence continuity after closing. Assignment and change-of-control provisions may require consent or alter the transaction timetable. An important relationship should be assessed through its signed terms as well as management's view of the counterparty.
AI contract review highlights potential issues in the documents you upload. Counsel evaluates the wording, the transaction structure and the legal consequences. Read the AI contract review software guide to see how findings become focused questions. Keep agreements with their amendments and schedules so the review does not rely on an incomplete picture.
Share according to the purpose of each review
Permissions per folder let you give participants access to the records relevant to their task. Your accountant may need detailed financial schedules, counsel needs the contract package, and a lender may need a defined financial set. Your internal investment notes need not be shared simply because external parties contribute evidence.
External sellers, lawyers and accountants invited for view and upload only do not need a paid seat. Internal analysis uses the seats included in your subscription. Expiring links help limit access to a defined review stage. Team and Fund include watermarking and a view audit log. Use these controls alongside confidentiality arrangements and the handling requirements your advisors identify.
Make seller answers reviewable
Team and Fund include Q&A and custom checklists. Ask for a document or reconciliation that addresses a defined point. A request to explain whether revenue is recurring is broad. A request for renewal terms and customer revenue schedules helps both the seller and the reviewers understand what evidence is needed.
Have the responsible advisor decide when the issue is resolved. The commercial implications may still require a separate discussion with investors or lenders. For a broader framework, use M&A due diligence. It helps connect financial and contract observations with the decision to revise assumptions, request protections or stop the process.
Prepare an investment discussion with visible limitations
Export the red flag report and use it alongside the financial advisor's work, counsel's findings and your investment memo. Identify the documents reviewed and the materials that remain unavailable. Explain the action proposed for an unresolved issue so decision makers can assess the remaining uncertainty.
A report supports your advisors and does not replace their review. AI can miss context, and a complete document set does not establish future performance. Keep a distinction between confirmed evidence, management representations and assumptions your team accepts. That clarity helps investors understand how the review informs the acquisition case without presenting uncertainty as resolved.
Choose around the active acquisition workload
Deal includes an active room, internal seats, storage, analyses and red flag report export. Team adds more active rooms and analyses plus custom checklists, Q&A, watermarking and a view audit log. Fund adds expanded capacity, unlimited seats, SSO, a portfolio view and priority support. Review exact allowances on Pricing.
Annual billing is the default and charges the year together at half the monthly subscription rate when expressed per month. Analysis usage counts per billing period, and deletion does not restore used analyses. Consider expected financial and contract document volume as well as the number of active targets. The one-time demo lets you inspect a report before choosing a paid plan.
FAQ
Acquisitions is a data room and document analysis tool for reviewing a target you bring to the process. It supports diligence and advisor collaboration.
An external accountant invited for view and upload only does not need a paid seat. Internal analysis and collaboration use the plan's included seats.
No. Investors and lenders define their own requirements. Use the report as supporting material alongside the professional work and evidence they request.
Start with evidence from your target
Analyze a document and inspect the demo report before creating your acquisition workspace.