Due Diligence Briefer

Description

--- name: due-diligence-briefer description: >- Use when a business owner or investor wants to evaluate a business before buying it. Triggers on: "due diligence on [business]", "should I buy this business", "evaluate this acquisition", "what's wrong with this business", "red flag check", "buying a business checklist". Researches financial health, industry benchmarks, red flags, and negotiation leverage — then delivers a structured briefing with a buy/caution/pass verdict. No API keys or paid tools required — works with web search alone. --- # Due Diligence Briefer > Before you write a cheque, know what you're really buying. This skill > transforms a business listing, broker memo, or seller-provided financials > into a structured due diligence briefing with red flags, industry context, > and negotiation ammunition. > > Author: mloki23 | Pipeline: pairs with competitor-intel-briefer for > pre-acquisition market context --- ## Minimum Required Inputs Do not proceed without all 3: 1. **Business name and industry** — what they sell, who they serve 2. **Key financials** — at minimum: asking price, annual revenue, and claimed profit (EBITDA or SDE). If the user only has a listing URL, extract what's available and flag gaps. 3. **Location** — country at minimum; city/state for regional benchmarking Ask for missing inputs before starting Phase 1. If the user provides a URL (e.g. business-for-sale listing), extract inputs from it first. --- ## Phase 1: Financial Stress Test (15-20 min) **Goal:** Determine whether the asking price is reasonable and uncover financial red flags. ### 1.1 Calculate baseline valuation multiples Compute using the figures the user provides: ``` Revenue multiple = Asking Price / Annual Revenue Profit multiple = Asking Price / Annual Profit (EBITDA or SDE) ``` ### 1.2 Research industry valuation multiples Search for typical multiples for the specific industry: ``` [business industry] business valuation multiples [year] [business industry] average EBITDA multiple small business typical revenue multiple for [industry] sale ``` Cap at 3 searches for 1.2. ### 1.3 Flag valuation discrepancies Compare the calculated multiples against industry averages: - If asking price multiple is >1.5x the industry average: HIGH PREMIUM flag - If profit multiple >5x for a small business (<$5M revenue): caution - If seller isn't using a standard multiple (e.g., "asset value only" for a service business): flag the non-standard valuation method ### 1.4 Check for common financial red flags Run these specific checks (web-searchable): ``` [A] "seller's discretionary earnings" OR "add-backs" red flags small business [B] "working capital" adjustment business sale trap [C] [industry] revenue concentration risk "customer concentration" ``` Cap at 3 searches for 1.4. **PROHIBITED during Phase 1:** Do not make a buy/caution/pass assessment yet. Observation and calculation only. ### Phase 1 Gate — DO NOT proceed until ALL checked: - [ ] Revenue and profit multiples calculated - [ ] Industry benchmark multiples found (at least 1 source) - [ ] Discrepancy flagged if multiple exceeds 1.5x industry average - [ ] Minimum 3 financial red flag areas checked (A, B, C above) - [ ] Summary presented to user: "Here's what the numbers say so far — does this match what you expected?" --- ## Phase 2: Operational & Market Red Flags (15-20 min) **Goal:** Uncover non-financial risks the seller isn't volunteering. ### 2.1 Customer and revenue risk Search: ``` [industry] customer concentration risk small business what happens when key customer leaves [industry] business ``` ### 2.2 Owner dependency check Search: ``` [industry] business owner dependency "key person risk" buying a business where owner is the brand ``` ### 2.3 Industry headwinds Search: ``` [industry] outlook [current year] challenges risks [industry] disruption technology regulatory threats ``` ### 2.4 Competitive pressure check Search: ``` [industry] new competitors entering market [current year] [industry] losing market share to [alternative/disruption] ``` Cap at 5 searches total across 2.1-2.4. ### 2.5 Cross-check with competitor-intel-briefer If the user has run competitor-intel-briefer for this industry, reference those findings. If they haven't, offer: "I can run a competitive intelligence briefing on this industry for deeper context — want me to?" ### Phase 2 Gate: - [ ] Customer concentration risk assessed - [ ] Owner dependency risk assessed - [ ] At least 1 industry headwind identified - [ ] At least 1 competitive threat identified - [ ] Red flags compiled into a numbered list presented to user --- ## Phase 3: Negotiation Position & Verdict (10-15 min) **Goal:** Deliver the final briefing with a clear recommended action. ### 3.1 Build the negotiation ammunition list From Phases 1-2, extract every weakness that weakens the seller's position: - Over-market valuation - Customer concentration above 30% - Owner-is-the-business dependency - Declining industry or new competitor threats - Inflated add-backs in profit claims - Missing working capital in deal structure ### 3.2 Research recent comparable sales Search: ``` [industry] business sold for less than asking price [year] [industry] business sale "deal fell through" OR "price reduced" ``` Cap at 2 searches. ### 3.3 Deliver the final briefing **Output format** — save to `due-diligence-[business-name]-[YYYY-MM-DD].md`: ```markdown # Due Diligence Briefing: [Business Name] **Date:** [YYYY-MM-DD] | **Status:** BUY / CAUTION / PASS ## The Numbers | Metric | This Business | Industry Avg | Flag | |--------|--------------|--------------|------| | Revenue Multiple | X.Xx | X.Xx | [OK/HIGH] | | Profit Multiple | X.Xx | X.Xx | [OK/HIGH] | | [Revenue/Profit Trend if available] | | | | ## Red Flags (ranked by severity) 1. **[Red flag]** — [specific detail with source] 2. ... ## What The Seller Isn't Saying *Pick the 2–3 most relevant to this deal — at least one must be supported by a specific finding:* - **Walkout risk:** If the owner handles key relationships or is the public face, what revenue leaves with them? - **Hidden capex:** Equipment age, lease renewals imminent, staff paid below-market (deferred cost bomb) - **Market timing signal:** Why is the seller selling now — plateau, new competitor, regulatory headwind? - **Concentration cliff:** What breaks if the top customer, supplier, or contract disappears? - **Earn-out trap:** Is the asking price padded with performance milestones that depend on the seller's cooperation post-sale? ## Negotiation Ammunition - [Specific weakness] → use this to push for [specific concession] - ... ## Verdict: [BUY / CAUTION / PASS] [2-3 sentence rationale referencing the strongest evidence] ## If Proceeding: First 3 Actions 1. [Specific — e.g., "Request last 3 years of tax returns, not just P&L"] 2. [Specific] 3. [Specific] --- *Researched via web search. Not financial or legal advice. Hire a professional for the binding stuff.* ``` ### 3.4 Ask the closing question After delivering the briefing: "Want me to run a competitor-intel-briefer on this industry for deeper market context before you decide?" ### Phase 3 Gate: - [ ] Negotiation ammunition list has minimum 3 items - [ ] Verdict (BUY/CAUTION/PASS) delivered with rationale - [ ] Output saved to `due-diligence-[name]-[date].md` - [ ] Closing question asked --- ## Prohibited Behaviours | Prohibited Action | Why | |-------------------|-----| | Skip financial ratio calculation | Without numbers, the verdict is opinion, not analysis | | Exceed search caps (3/3/5/2 per phase) | Anti-loop — compile with what you have | | Make a verdict without industry benchmarks | A multiple is meaningless without context | | Present as financial advice | Always include the disclaimer — legal liability risk | | Skip Phase gate checks | Gates prevent delivering half-researched verdicts | | Use paid data sources or APIs | Web search only — this is our differentiator | --- ## Quality Standards — Complete When: - [ ] All 3 phases executed in sequence with every gate passed - [ ] Revenue and profit multiples calculated and benchmarked - [ ] Minimum 5 red flags checked across financial and operational dimensions - [ ] Negotiation ammunition has 3+ items tied to specific findings - [ ] Verdict is BUY, CAUTION, or PASS — never "it depends" - [ ] Output file saved with correct naming convention - [ ] Disclaimer included in output --- ## Australian-Aware If the user provides an Australian business or ABN/ACN: - Use AUD throughout (skip USD default) - Search for Australian-specific benchmarks: "Australian [industry] valuation multiples", "small business sale Australia multiples" - Check for Australian-specific traps: earn-out structures, vendor finance terms, GST on going concern, stamp duty on business assets (state-varying) - Reference ATO small business benchmarks if relevant --- ## Context Budget After Phase 1: retain only the calculated multiples, industry benchmarks, and flag list — discard raw search results. After Phase 2: retain only the numbered red flag list — discard individual search outputs. After Phase 3: the briefing file is the artifact. Nothing else from the session needs to be retained.

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