Risk triage
Due Diligence Red Flags
A red flag is a reason to deepen the evidence, not automatically a reason to kill the deal.
Buyer lens
Slow down where the confidence of the explanation exceeds the quality of the evidence.
Seller lens
Identify and resolve obvious inconsistencies before the buyer interprets them under time pressure.
Why it matters
- Numbers that do not reconcile deserve explanation.
- Verbal explanations without support should remain representations.
- Repeated inability to produce normal records can itself be transaction information.
Evidence to reconcile
- Reconciliation exceptions
- Missing-item list
- Owner-dependence map
- Concentration schedules
- Historical anomalies