A due diligence report is read by people deciding whether to proceed. Separate what was verified from what was represented, state what could not be examined and why, and never let a limitation on scope sit only in a covering email.
Due Diligence Report
Proposed investment in [TARGET COMPANY NAME]
A due diligence report is read by people deciding whether to proceed. Separate what was verified from what was represented, state what could not be examined and why, and never let a limitation on scope sit only in a covering email.
| Item | Detail |
|---|---|
| Prepared for | [INVESTOR NAME] |
| Prepared by | [FIRM NAME] |
| Target | [TARGET COMPANY NAME], CIN [CIN], registered office at [ADDRESS] |
| Transaction | [DESCRIBE — e.g. subscription to Series A compulsorily convertible preference shares for ₹ ______] |
| Scope | [Legal / financial / tax / technology / human resources] due diligence |
| Diligence period | [The three financial years ended ______ and the stub period to ______; corporate and exchange control matters reviewed since inception] |
| Cut-off date | [DATE] — no information received after this date has been considered |
| Report date | [DATE] |
| Version | [DRAFT / FINAL] — [VERSION NUMBER] |
1. Basis of this Report
1.1This report has been prepared by [FIRM NAME] for [INVESTOR NAME] solely in connection with the proposed transaction described above. It may not be relied on by any other person, or for any other purpose, without our prior written consent.
1.2This report is based on the documents and information listed in Annexure A, made available to us in the data room hosted at [PLATFORM] up to the cut-off date, together with written responses to our queries and the management discussions listed in Annexure B. We have not independently verified the accuracy or completeness of the information provided and have assumed that it is true, complete and not misleading.
1.3We have assumed the genuineness of all signatures, the authenticity of all documents submitted as originals, and the conformity to originals of all copies. Where we have relied on searches of public records, those records are subject to delay in updating and to the accuracy of the underlying filings.
1.4This report addresses only the matters within the scope stated above and is limited to the laws of India. We express no opinion on the commercial merits of the transaction, on the valuation of the Target, on the accuracy of any projection, or on any matter of foreign law, accounting or actuarial practice.
1.5Our review has been conducted on a materiality threshold of ₹ [AMOUNT] for individual items and ₹ [AMOUNT] in aggregate, agreed with you. Matters below that threshold have not been reported unless they indicate a systemic failure.
1.6Where information requested was not provided, that fact is recorded in Annexure C. The absence of a finding in respect of an area where information was not provided should not be taken as confirmation that no issue exists.
1.7This report speaks as at the cut-off date. We assume no obligation to update it for events occurring after that date.
7 more pages in the Word file
Preview of the first page. Highlighted fields are the ones you fill in — they appear the same way in Word. Scroll the preview to read on; the full document runs to 8 pages.
These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.
An investment committee reads the first page. Lead with the two or three findings that change the deal, say whether they are fixable and by when, and give a recommendation. The findings register is the evidence; the summary is the advice. A report that opens with a description of the scope has buried the point.
Every finding should carry a number or the word "unquantified". A blank exposure column is read as zero by whoever prices the deal, which is how a Red finding becomes a warranty rather than a condition precedent. Where the exposure genuinely cannot be bounded — an intellectual property title defect, for example — that is itself the reason it must be a condition precedent rather than an indemnity.
A findings register that does not map to conditions precedent, indemnities, warranties and covenants leaves the lawyers drafting the transaction documents to make the risk allocation decisions themselves. Do the mapping in the report, with the finding reference against each item, so the subscription agreement can be drafted straight from Section 5.
Recording what was asked for and never supplied does three things: it prevents the report from being read as a clean bill of health in an area never reviewed, it gives the investor a basis to make delivery a condition precedent, and it protects the adviser. Chase in writing and record the chase dates.
Clause 1.1 restricts reliance. Where a co-investor, a lender or a fund’s limited partners will want to rely, deal with it by way of a reliance letter with its own liability cap rather than by widening the addressee list. Where the target will see the report, agree in advance whether it sees the full report or a redacted version.
Clause 1.5 records the threshold. Agree it with the client before starting, not in the report. A threshold set too low produces a register nobody reads; set too high, it misses a pattern of small failures that together indicate that nobody is minding the compliance function.
Three late filings is a housekeeping item. Thirty late filings is a finding about management. Where individual items fall below the materiality threshold but together show a systemic failure, report the pattern as a single finding and rate it on the pattern, not on the individual amounts.
A defect in the first allotment, an unstamped early share certificate, or an unreported foreign investment from three rounds ago does not age out. Scope those workstreams from incorporation even where the financial scope is three years, and say so in Clause 1 so nobody assumes otherwise.
It means the matter must be resolved before money moves, or priced. Most Red findings in an early-stage diligence — an unassigned contractor, a domain in a personal name, a cap table that does not reconcile — are entirely fixable in two weeks. The error is treating them as warranty matters and discovering at exit that they were never fixed.
The findings register should become the tracker for condition precedent satisfaction, with the status updated as items close. Reissue it at completion showing what was resolved and what carried through into the transaction documents, so the investor has a single record.
State the cut-off date and hold to it. A report that quietly absorbs documents received after the cut-off, without re-dating, creates ambiguity about what was reviewed. If material information arrives late, issue a supplement rather than editing the report.
This template reflects Indian practice current as of {{DATE OF USE}}. Adapt the workstreams to the target — a regulated business, a company with overseas subsidiaries, or a business holding immovable property will each need substantial additional sections.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, company secretary, or chartered accountant as relevant) before you rely on it.