---
name: mna-diligence
description: "Scaevola's deal kit — workstream checklists, data-room walk discipline, red-flag taxonomy with deal-term consequences, R&W heatmap method, disclosure-schedule discipline, closing-conditions checklist, and the tax-flag slice for Modestinus."
allowed-tools:
  - Read
  - Write
  - Glob
  - Grep
---

# M&A Diligence

## Workstream Checklists (scoped to deal size)

**Corporate & capitalization**: charter docs, cap table (options/warrants/
SAFEs fully diluted), board/shareholder consents, subsidiaries, good
standing.

**Material contracts** (Gaius): top customers/suppliers by revenue, change-
of-control and anti-assignment clauses (the deal-killers — pull every one),
exclusivity/MFN, termination rights triggered by the deal.

**IP** (Minerva): registered portfolio + chain of title, OSS bill of
materials, inbound/outbound licenses, employee/contractor assignment
coverage, pending disputes.

**Employment** (Paulus): key-employee agreements + retention risk, change-
of-control payments (golden parachutes — tax flag to Modestinus),
classification exposure, works councils/unions, pending claims.

**Privacy & data** (Angerona): data inventory, regime exposure, breach
history, processor chains, transfer mechanisms — data is often the asset;
diligence it like one.

**Regulatory** (Ulpian): licenses/permits + transferability, antitrust/
merger-control thresholds (HSR/EUMR analysis marked for the filing
specialist), sector approvals, sanctions screening (Janus).

**Litigation** (Cicero): pending/threatened matters, judgments, settlement
obligations, litigation-funding arrangements.

**Tax** (Modestinus): returns and open audits, attribute carryovers,
structure flags — every quantified conclusion marked
`[CONFIRM WITH TAX ADVISOR OF RECORD]`.

## Data-Room Walk Discipline

- Index everything reviewed (folder → document → date reviewed).
- **`[NOT IN DATA ROOM]` is a finding** — the gap list is a first-class
  output ranked by what the absence could conceal.
- Sample where volume forbids completeness — state the sampling rule
  (e.g., "all contracts > $X + random 10%"), never imply full review.
- Late-added documents get a dated supplement pass.

## Red-Flag Taxonomy

Each finding classified by severity (deal-finding framework: validity 30% ×
materiality 25% × curability 20% × coverage feasibility 15% × integration
consequence 10%) and mapped to its consequence:

| Severity | Consequence menu |
|---|---|
| **Critical** | price adjustment · specific indemnity · condition precedent · walk-away analysis |
| **High** | indemnity scope/survival extension · escrow/holdback · pre-closing covenant |
| **Moderate** | disclosure-schedule entry · post-closing integration item |
| **Low** | noted; no deal-term action |

A red flag that ends without a consequence recommendation is unfinished.

## R&W Heatmap Method

```
| Rep (SPA §) | Diligence findings mapped | Exposure tier | Survival | Basket/cap treatment | RWI insurable? |
```

Rules: every Critical/High finding maps to at least one rep (or exposes a
missing rep — flag it); fundamental reps (title, capitalization, authority)
tracked separately with longer survival; known-issue findings cannot hide
behind RWI (disclosed = excluded).

## Disclosure-Schedule Discipline

Disclosure against specific reps, specific and dated; "see data room" is
not disclosure; cross-references resolved; sandbagging/anti-sandbagging
posture of the SPA noted because it changes what disclosure protects.

## Closing-Conditions Checklist

Regulatory approvals (each with owner + clock) · third-party consents
(from the change-of-control pull) · financing conditions · MAE definition
review (carve-outs catalogued) · deliverables matrix (certificates,
opinions, payoff letters, resignations) · bring-down standard for reps.

## Required Logging

Workstream coverage table · data-room index + gap list with sampling rule ·
red-flag register with consequences · heatmap · open-items list with
owners. Feeds the Diligence Report Format (`curia-protocol` §4).