Seven hours into day one, I still hadn’t opened a single financial statement.
I was in the Q&A log, third question down, watching a seller’s counsel type “please clarify scope” for the second time. On my last three deals as an associate, that wait, not the numbers, is what killed momentum. Buyers assume diligence is a reading exercise. It’s a coordination exercise that occasionally involves reading.
So when I got promoted to run my own files, I started keeping a notebook for the first five days. Same five days, tracked across eleven deals since. What follows is that notebook, stripped of client names and rearranged into something you can actually use the next time you’re handed credentials to a seller’s M&A data room before the first management call.
Day one is not for reading
Open every folder. All of them. Not to read what’s inside, but to map what exists before you form any opinion about the business.
You’re building a floor plan. Financials, contracts, employee files, litigation, intellectual property, tax. I skim the top-level folder names and write them on a legal pad, then mark which ones feel thin. A folder called “Contracts” with four files for a company that’s been operating for a decade tells you something before you’ve read a word.
Two hours, max. Then stop. Close the laptop.
The urge to start scrolling spreadsheets on day one is strong and it’s a trap. You’ll anchor on whatever number you see first and spend the rest of the week chasing it. I’ve watched a colleague build an entire thesis around first-quarter revenue before realizing the fiscal year started in a different month.
Index against the checklist, not against your curiosity
Every deal has a request list. It’s usually 90 to 200 items, drafted by the buyer’s counsel, agreed with the seller before the room opens. Your job on day two is matching the checklist to the folder tree, item by item.
This is the least glamorous part of diligence and the part that determines whether the deal closes on schedule. Missing index items are the number one cause of timeline slip, and I say that from the pattern, not from a published report, so treat it as an observation from someone who’s lived it rather than a statistic.
Here’s what I do. I open two windows side by side, checklist on the left, data room on the right. Every item gets one of four marks:
- Present, complete, referenced
- Present, incomplete, flagged
- Missing, requested via Q&A
- Missing, but probably not material
The fourth category is where judgment lives. A missing global entity list for a company with two offices is noise. A missing global entity list for a company with an overseas subsidiary is a question for the CFO.
Three things I check before any other number
By day three, most buyers dive into the P&L. I don’t. Three items go to the front of the queue, in this order:
Customer concentration. If the top five customers represent the majority of revenue, the entire valuation rationale changes. You’re not buying a business, you’re buying a set of relationships the deal itself could damage. The Federal Trade Commission and other regulators review merger filings under antitrust rules, and concentration is one of the factors that shapes how a deal gets structured, so it’s worth understanding before you’re deep in financial models.
Change-of-control clauses. Any contract with a clause that lets the counterparty walk when ownership changes needs to be flagged to counsel on day three, not day forty. I’ve seen a single supplier agreement shift total deal value by a meaningful margin once the parties negotiated consent fees.
Employee classification. Contractors treated as employees, or the reverse, in a jurisdiction that cares about the distinction. This is the kind of thing that surfaces post-closing as a liability nobody budgeted for.
None of these are thrilling. All three show up in the majority of my post-mortems on deals that went sideways.
How to write a Q&A entry the seller will actually answer
Here’s the mistake I made for two years. I’d write “please provide detail on customer churn for the past three years.” Vague prompts get vague answers.
The fix is to structure every question the same way. Reference the document you’re asking about by name. State the specific metric you need. Say what decision the answer informs. Keep it under four sentences.
Compare this. “Please clarify.” Two words, zero direction. That’s the kind of question that sat unanswered in my previous deal for a week.
Here’s the version I wish I’d written. “Regarding Exhibit 4.2 Customer Retention Schedule, the 2024 tab shows a churn figure inconsistent with the 2024 revenue bridge in the financial pack. Please confirm which is correct so we can finalize the working capital model.” That one gets answered in a day.
Batch your questions. Sending twelve separate entries on a Tuesday afternoon is fine. Sending one every forty minutes from Monday through Friday makes you the person the seller’s counsel starts ignoring by Wednesday. Group by document, group by theme, send two or three batches a day at most.
The permission trap nobody warns buyers about
Data room providers meter exactly who can see, download, or print each file. Every view is logged. Every download is timestamped.
That’s a good thing in theory. It’s also how a buyer creates a paper trail they’d rather not have. If you download the entire workforce file on day one and never mention it in any memo, and then a discrimination question comes up in week three, someone will ask why you had that information and sat on it. Not a legal problem, I’m not a lawyer, just an optics problem that burns time.
Scope your downloads to the deals you’re actually working on. Ask for permission changes through the room, not through email threads. Keep your own notes in a single local document tied to the index, not scattered across six browser tabs. Basic operational cybersecurity hygiene matters too, and the National Institute of Standards and Technology publishes practical guidance that maps cleanly to how a buyer should handle confidential material during a live transaction.
A working rhythm I’ve settled into
Morning: twenty minutes scanning overnight Q&A responses, updating the index. Midday: two working sessions on the day’s priority topic, whether that’s employment, contracts, or financials. Afternoon: one new batch of questions, one call with the deal team.
That’s it. Five days in, you’ll have an index that’s 80 percent complete, a Q&A log that shows progress rather than panic, and enough understanding of the target to write a first draft of the diligence findings memo. Not a finished memo. A first draft.
The deals that close smoothly are almost never the ones where the buyer reads the most. They’re the ones where the buyer made it easy for everyone else to keep up.
The next time you’re three folders deep and considering a sixth hour at the desk, ask yourself which of your open questions is actually blocking a decision. Then send that one. Skip the rest until morning.
About the Author
