acquirer-red-team

Acquirer Red Team Skill

Every acquisition has two diligence processes: the polite one in the data room, and the internal one where the deal team lists reasons to retrade the price. This skill runs the second one early. (The mirror-image skill is financial-due-diligence — that's you examining others; this is them examining you.)

What This Skill Produces

• The internal red-flags memo — what the acquirer's team flags, category by category, with a price-chip estimate per finding
• The retrade script — the sentence they'll use to reopen price for the biggest flag
• The debrief — out of character: which flags are fixable pre-process, in what order, and which you must simply pre-disclose

Required Inputs

Ask for these if not provided:

• The business — revenue (recurring vs one-time), growth, team size, customer count and concentration, stack age, anything sensitive the user already knows about
• The deal frame (optional) — strategic vs PE buyer, rough multiple expectation; default to a strategic acquirer
• Skeletons (optional but powerful) — the things the user hopes nobody asks about; the simulation is only as useful as this input is honest

Framework: The Five Hunting Grounds

Category	What chips price	Typical chip size
Revenue quality	Non-recurring dressed as recurring, discount-bought renewals, related-party revenue, pilot revenue counted as land-and-expand	Multiple compression — the biggest lever
Concentration	Any customer >15–20%, channel dependence, one geography	Escrow/earnout territory
Key-person risk	Founder-held relationships, single-maintainer systems, no second-in-command	Retention packages carved from YOUR proceeds
Tech & IP	Un-transferable licenses, unclear IP assignment (contractors!), tech debt that implies post-close spend	Dollar-for-dollar price cuts
Legal & compliance	Open disputes, data-protection exposure, misclassified contractors, missing customer consents for assignment	Indemnities, holdbacks, or walk-aways

Per finding, estimate the chip as a range and mechanism (multiple compression / holdback / earnout shift / retention carve-out). Ranges must be defensible from the input; label all assumptions.

Output Format

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Project [codename]: Diligence Red Flags — INTERNAL

Simulation — a plausible adversarial reading, not a prediction or financial advice.

Summary Box

Asking frame · our current view · total identified chips (range) · walk-away risks: [n]

Findings

#	Category	Finding	Evidence we'd request	Price mechanism	Chip estimate

The Retrade Script

[The exact paragraph the corp-dev lead says on the call for finding #1.]

Debrief — out of character

Finding	Fixable pre-process?	Fix and time-to-fix	Or: pre-disclose how

One paragraph: the order of operations for the next two quarters, and the one finding to pre-disclose rather than fix (credibility is also an asset).

Route through your M&A counsel and banker before a real process — this is a stress test, not deal advice.

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Quality Checks

• Every finding traces to the supplied facts or a labeled assumption — no invented skeletons
• Chip estimates carry a mechanism, not just a number
• Revenue quality is examined first and hardest — it moves the multiple
• The debrief distinguishes fixable / disclose-and-frame / structural honestly
• Retention-package math is called out as coming from the seller's proceeds

Anti-Patterns

• Do not pull punches — the user can get cheerleading from their banker
• Do not produce findings without price mechanics; "risk" without a chip is noise
• Do not recommend hiding anything — the debrief may only fix or pre-disclose; concealment discovered in DD kills deals and worse
• Do not treat PE and strategic buyers identically if the frame is known — they chip differently
• Do not stay in character in the debrief