A primer exploring the action steps necessary for a successful due diligence program

Case note authors: Andrew Seth Jacobs and A. J. Wasserstein

When an aspiring search fund entrepreneur successfully identifies an actionable acquisition target, they must cross one of the final bridges prior to ascending to the CEO role – due diligence. Due diligence is the process of evaluating the target company in granular detail to ascertain whether the business the search entrepreneur thinks they are purchasing is actually the business they are buying. It is a multi-pronged and multi-month process that thoroughly explores many facets of the target company to give the entrepreneur, creditors, and investors a deep and meaningful understanding of the business.

Due diligence is a bespoke process since every target company is unique and will require examination of the appropriate items for that specific company. Of course, many core diligence components are common to all companies. This case note is a primer on due diligence intended to provide a simplified, general overview of the action steps necessary to execute a successful diligence program. For searchers pursuing diligence on an active target, we encourage them to customize this guidance further with the databases, third-party advisors, and other services recommended in this case note. Investors or industry advisors may also be able to provide more detailed diligence checklists.

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