· 7 min read
By the end of this guide, you will have a 5-agent due diligence team that evaluates a target company across four dimensions: financial health, legal and compliance risk, market position, and operational capabilities. A Diligence Coordinator manages the process, assigns investigation areas, collects findings, and produces a structured investment memo with risk ratings and go/no-go recommendations.
Traditional due diligence takes weeks and costs tens of thousands of dollars in analyst and legal time. While this agent team does not replace human judgment on deal-critical decisions, it compresses the preliminary assessment phase from days to hours. The output is a detailed first-pass analysis that tells your team where to focus their deeper investigation -- and whether the deal is worth investigating at all.
You need Claude Code or the Claude Agent SDK configured and ready. You also need a target company brief: the company name, what it does, the context for the diligence (acquisition, investment, partnership), and any specific concerns you want investigated.
Prepare the following materials if available: the target company's public financial statements or pitch deck, information about the deal structure, your investment thesis or strategic rationale, and any red flags that triggered the diligence process. The more context your agents have, the more targeted their investigation will be.
Mission: Receive the target company brief, decompose the diligence into four workstreams (financial, legal, market, operational), dispatch each to the appropriate specialist agent, track progress, identify cross-cutting risks that appear in multiple workstreams, and compile the final investment memo.
The Coordinator maintains a risk register throughout the process. When the Financial Analyst flags declining margins and the Market Analyst reports increasing competitive pressure, the Coordinator connects these findings -- declining margins may be a symptom of the competitive dynamics, not just operational inefficiency. These cross-cutting insights are often the most valuable part of diligence.
Prompt guidance: Give the Coordinator the deal context explicitly: "This is an acquisition target in the Series B SaaS space. The buyer is interested in the target's customer base and technology. The asking valuation is 8x ARR." This context shapes how every finding is interpreted.
Mission: Evaluate the target's financial health by analyzing revenue trends, profitability metrics, cash flow patterns, capital structure, customer concentration, and unit economics. Identify financial risks and inconsistencies.
This agent looks at the numbers with skepticism. It checks whether revenue growth is real or driven by one-time contracts. It examines whether margins are improving or deteriorating. It calculates burn rate and runway if the company is pre-profit. It flags customer concentration risk -- if 40% of revenue comes from one client, that is a material risk regardless of how fast revenue is growing.
Prompt guidance: Specify the financial metrics that matter for this deal type. For a SaaS acquisition: ARR, MRR growth rate, net revenue retention, CAC payback period, gross margin, and LTV/CAC ratio. For a manufacturing acquisition: EBITDA margin, capex requirements, working capital cycle, and asset utilization.
Mission: Identify legal risks including pending litigation, regulatory compliance gaps, intellectual property concerns, contract dependencies, and governance issues. Assess the severity and potential financial exposure of each risk.
The Legal Reviewer examines corporate structure, outstanding legal proceedings, regulatory filings, IP ownership and protection status, key contract terms (especially change-of-control clauses that could be triggered by an acquisition), employment agreements with key personnel, and compliance with relevant industry regulations.
Prompt guidance: Specify the jurisdictions involved and any industry-specific regulations. A healthcare company faces HIPAA scrutiny. A fintech company faces financial services regulations. A company with European customers faces GDPR requirements. Tell this agent what regulatory frameworks to check against.
Mission: Evaluate the target's competitive position, market dynamics, growth trajectory, and strategic defensibility. Assess whether the market supports the valuation and growth assumptions embedded in the deal.
This agent answers the question: "Is this company well-positioned in a good market?" It analyzes market size and growth rates, competitive landscape and the target's differentiation, customer acquisition channels, switching costs and retention dynamics, and emerging threats that could disrupt the target's position.
Prompt guidance: Provide the buyer's strategic thesis so the Market Analyst can evaluate whether market realities support it. If the thesis is "this company will dominate the mid-market segment within 3 years," the Analyst needs to assess mid-market dynamics specifically, not just the overall market.
Mission: Assess the target's operational capabilities, technology infrastructure, team quality, scalability constraints, and integration complexity. Identify operational risks and hidden costs.
The Operational Reviewer looks under the hood. It evaluates the technology stack for technical debt, assesses the management team's depth and retention risk, examines operational processes for scalability, identifies integration challenges (incompatible systems, cultural misalignment, key-person dependencies), and estimates the true cost of post-acquisition integration.
Prompt guidance: If this is an acquisition, tell the agent about the buyer's existing operations so it can assess compatibility. "The buyer runs on AWS with a microservices architecture and uses Salesforce for CRM. The target runs on-premise with a monolithic application and uses HubSpot." These details matter for integration complexity estimates.
Due diligence benefits from parallel investigation with periodic coordination:
Due diligence prompts need to be unusually specific about what "risk" means in context. A 30% customer concentration might be acceptable for a $5M ARR company but alarming for a $50M ARR company. Context shapes interpretation.
Role and perspective. "You are a financial analyst conducting buy-side due diligence on a potential acquisition. Your job is to identify financial risks that could affect the deal valuation or post-acquisition performance. You are skeptical by default -- your role is to find problems, not validate the deal."
Investigation framework. "Analyze the following dimensions: (1) Revenue quality -- is growth organic, sustainable, and diversified? (2) Profitability trajectory -- are margins improving or deteriorating, and why? (3) Cash flow -- does the business generate cash or consume it? (4) Customer economics -- what are the unit economics, and do they improve at scale? (5) Financial risks -- what could go wrong financially in the next 12-24 months?"
Output structure. "For each finding, provide: the metric or observation, the benchmark or expected range, whether the target falls above or below expectations, the risk severity (critical, material, moderate, low), and the implication for the deal."
The final deliverable is a structured investment memo. Give the Coordinator an explicit template:
The investment memo for a hypothetical SaaS acquisition target might include:
Executive Summary: Target is a B2B SaaS company with $12M ARR growing at 45% YoY. Financial fundamentals are strong (72% gross margin, 115% net revenue retention) but three material risks require attention: 35% customer concentration in the top 3 accounts, pending patent litigation with estimated exposure of $2-4M, and significant technical debt in the core platform that will require $1.5-2M in remediation within 18 months of acquisition.
Risk Register:
| Risk | Severity | Likelihood | Impact | Workstream |
|---|---|---|---|---|
| Customer concentration | Material | Medium | $4.2M ARR at risk | Financial |
| Patent litigation | Material | Medium | $2-4M exposure | Legal |
| Technical debt remediation | Moderate | High | $1.5-2M cost | Operational |
| Key-person dependency (CTO) | Moderate | Medium | Platform knowledge loss | Operational |
| GDPR compliance gaps | Moderate | Low | Regulatory fines | Legal |
Recommendation: Conditional go. Proceed with detailed diligence subject to: (1) resolution path for patent litigation, (2) retention agreements for CTO and 2 senior engineers, (3) independent technical assessment of platform remediation costs.
Staged diligence. For early-stage deals, run only the Financial and Market agents for a quick screen. If the initial assessment is positive, run the full team for deep diligence. This saves compute on deals that clearly do not meet criteria.
Adversarial pairing. Run the Financial Analyst in "bull case" and "bear case" modes simultaneously to surface the range of possible interpretations. The Coordinator can then present both views and let the human decision-maker weigh them.
Sector-specific checklists. Maintain separate investigation checklists for different sectors. Healthcare diligence requires HIPAA compliance review. Fintech requires financial licensing verification. E-commerce requires supply chain assessment. Pre-build these checklists and load the appropriate one based on the target's industry.
Integration with data sources. Connect the Financial Analyst to public financial databases and the Legal Reviewer to litigation databases. The more real data your agents can access, the more specific and useful their findings will be.