Review · risks · conditions
Project due diligence:
from questions to a decision
Due diligence is not about accumulating documents. Its purpose is to test the key assumptions of a project, find circumstances that could change the decision, and translate findings into clear terms of a transaction, financing or launch.
Anton Konnov · 21 August 2026 · 11 min read
Perimeter
Depth of review depends on the decision and the risk
Before requesting documents, record the subject: an investment, a credit, an asset purchase, a partnership or an internal launch. Specify the amount and form of involvement, the project stage, the decision criteria and the factors that could genuinely alter the decision.
A review of an early-stage project differs from that of a going concern. The perimeter must account for industry, jurisdiction, scale, data maturity and the cost of error; specialised legal, tax, technical and environmental questions require qualified specialists.
Six steps
How to conduct project due diligence
Frame the question and criteria
Define what must be confirmed for a go decision, which risks are unacceptable and which gaps can be closed with conditions. Build a risk-weighted work plan rather than a standard checklist for all projects.
Set up the data room and audit trail
Maintain a request register, received versions, owners and open questions. A material finding must reference a document, system, interview or independent confirmation; the absence of data is itself a finding.
Assess the market and operating model
Match claimed demand against contracts, pipeline and customer behaviour; evaluate competition, pricing, capacity, technology, suppliers, personnel, permits, timelines and critical dependencies. A forecast must be achievable given the project's resources.
Assess finances, law and tax
Reconcile management data with primary sources, normalise one-off effects, review working capital, debt, pledges, guarantees, obligations and liquidity needs. Separately evaluate rights to assets, material contracts, disputes, licences and corporate and tax structure.
Evaluate the team, integrity and E&S risks
Check competencies, delegation of authority, motivation, dependence on key individuals and reputational or conflict circumstances. Environmental, social, health and other sector-specific risks are assessed by the scale of potential impact and the team's ability to manage them.
Translate findings into a decision
For each material question, specify the fact, source, uncertainty, potential effect and action. The outcome may be a reject, additional testing, a price or structure adjustment, a precondition, a warranty, a limit, tranches or a remediation plan with monitoring.
Areas of review
A unified picture instead of separate opinions
Commercial
Market, customers, competitors, pricing, channels and demand confirmation.
Operations and technology
Technology, capacity, resources, suppliers, timelines and permits.
Finance and tax
Quality of results, cash flow, debt, obligations and structure.
Law, team and sustainability
Rights, contracts, disputes, governance, integrity and E&S impact.
Red flags
What should change the course of the review
A key assertion cannot be linked to independent or primary evidence.
Document versions and figures change without an explainable audit trail.
A forecast requires demand, capacity, funding or permits that do not yet exist.
Material obligations, related parties or conflicts are disclosed late.
The team refuses to discuss a downside case or close a gap.
The report
A finding is only valuable alongside its impact and action
Separate the confirmed fact, the specialist's assessment and the unresolved uncertainty. Rank issues by probability, scale and reversibility, but do not bury a critical blocker inside an average assessment.
The final document should show a recommendation, the basis, review limitations, open questions, decision conditions, responsible parties and timelines. Appendices preserve the evidence; the main body remains readable without reconstructing logic from folders.
AI in due diligence
Faster at spotting discrepancies without losing verifiability
AI helps index a data room, reconcile document versions, extract obligations, build a query register and link every finding to its source. Specialists still determine materiality, check context and remain responsible for legal, tax, technical and investment conclusions.
Source materials
Methodological reference points
IFC: due diligence areas — integrity, tax, corruption risks and conflicts ↗
IFC: review, investment decision, conditions and subsequent monitoring ↗
This material is educational and does not replace legal, tax, technical, environmental or investment advice for a specific transaction.
First step
Frame the decision and the three key uncertainties
We will define a risk-weighted review perimeter and the format of a final finding.