Best AI Prompts for Due Diligence Checklists with ChatGPT

TL;DR

• Due diligence is a high-stakes process where missing something critical can destroy deal value; ChatGPT helps ensure comprehensive coverage.
• The most effective due diligence prompts specify the deal context, stage, and specific concerns before generating checklist items.
• Use ChatGPT for creating structured checklists, identifying blind spots, and ensuring nothing is overlooked across financial, legal, and operational areas.
• The combination of ChatGPT’s systematic approach plus human expertise produces more thorough due diligence than either alone.
• Due diligence checklists should be customized per deal; generic templates are a starting point, not a finish line.

Introduction

A single overlooked clause. One unverified assumption about customer concentration. A liability hiding in plain sight in the cap table. In mergers and acquisitions, these details determine whether a deal creates value or destroys it. The difference between a successful acquisition and a catastrophic one is often the thoroughness of due diligence.

Due diligence is comprehensive by definition. You are supposed to examine every aspect of a target company. But in practice, deal teams have limited time and infinite things to check. The natural human tendency is to focus on areas you know well and miss areas outside your expertise. This creates systematic blind spots that have ended many an acquisition.

ChatGPT changes due diligence by ensuring systematic coverage. It can generate comprehensive checklists that cover areas you might not think to examine, identify questions specific to the target’s industry and situation, and help you structure the investigation for maximum efficiency. The key is knowing how to prompt so ChatGPT understands the deal context, your concerns, and the stakes involved.

This guide provides the best ChatGPT prompts for due diligence — helping venture capital, private equity, and M&A professionals conduct more thorough reviews without missing the details that matter.

Table of Contents

1. Why Due Diligence Fails
2. Due Diligence Framework
3. Financial Due Diligence Prompts
4. Legal Due Diligence Prompts
5. Operational Due Diligence Prompts
6. Commercial Due Diligence
7. Technical Due Diligence
8. HR and People Due Diligence
9. FAQ
10. Conclusion

1. Why Due Diligence Fails

Understanding common due diligence pitfalls.

Expertise Bias: Deal teams over-index on areas they understand and under-examine areas outside their comfort zone. A financial expert might miss technical debt; a technologist might miss cap table nuances.

Time Pressure: Deals move fast. The pressure to close can cause teams to abbreviate due diligence on areas that seem low-risk. Low-risk areas sometimes hide the biggest liabilities.

Information Asymmetry: Sellers know their company; buyers do not. Management presentations emphasize strengths and minimize weaknesses. Without systematic probing, you see only what the seller wants you to see.

Checklist Rigidity: Generic due diligence checklists provide false confidence. They ensure you check standard boxes without ensuring you examine what matters for this specific deal.

Confirmation Bias: Once you are inclined to do a deal, there is psychological pressure to find reasons it is a good idea. Critical findings get rationalized rather than escalated.

Silo Investigation: Different team members investigate different areas without sharing findings. Critical risks that span categories get missed because no one owns the intersection.

2. Due Diligence Framework

Structure your approach for maximum coverage.

Deal Context First: Before generating any checklist, establish the deal context. Deal type (acquisition, minority investment, full merger), strategic rationale (why this deal makes sense), key concerns or red flags already identified, and deal timeline (when decisions must be made).

Category Coverage: Due diligence spans multiple domains. Financial (is the money real?), Legal (are there hidden liabilities?), Operational (can this scale?), Commercial (is there market fit?), Technical (is the tech sound?), HR/People (is the team irreplaceable?). Each category has sub-areas that require examination.

Stage-Appropriate Depth: Not every deal requires the same depth. Seed investments might skip full legal DD; platform acquisitions warrant deep technical scrutiny. Match diligence depth to deal size and risk profile.

Red Flag Elevation: Identify which findings are absolute blockers versus acceptable risks with mitigation. This framing helps focus investigation on the details that actually matter.

Integration Planning: Due diligence should inform integration planning. The findings that matter most are those that affect how you combine the two organizations.

3. Financial Due Diligence Prompts

Ensure the numbers are real and complete.

Financial Audit Checklist Prompt: “Generate a comprehensive financial due diligence checklist for acquiring: [company description]. Include: Revenue verification (recurring vs. one-time, concentration), Expense legitimacy (what is in COGS vs. operating expense), Balance sheet completeness (are all liabilities recorded?), Cash flow accuracy (does cash flow match income?), Quality of earnings analysis (adjustments to reported earnings).”

Revenue Quality Prompt: “Assess revenue quality for: [company]. Questions to investigate: What percentage is recurring vs. transactional? Customer concentration (top 10 customers as % of revenue)? Contract terms (duration, renewal rates, churn history)? Revenue recognition timing (are they aggressive or conservative)? Cross-revenue (intercompany transactions that inflate numbers)?”

Liability Discovery Prompt: “Identify potential hidden liabilities for: [company]. Areas to probe: Off-balance sheet commitments, Pending litigation (even if not disclosed), Warranty claims history, Environmental liabilities (if applicable), Employee benefit obligations, Tax positions taken that might be challenged. What questions should I ask? What documents should I request?”

Working Capital Analysis Prompt: “Analyze working capital dynamics for: [company]. Include: Historical working capital as percentage of revenue, Seasonality patterns, Days sales outstanding (is receivables collection healthy?), Days inventory outstanding (is inventory building?), Accounts payable terms. What red flags should I look for?”

Cap Table Verification Prompt: “Verify cap table accuracy for: [company]. Questions: Are all option grants documented and priced correctly? Are there any preferences that affect exit distributions? Are there any rights or restrictions not visible in the simplified cap table? Are there any promises made to investors that are not documented?”

Quality of Earnings Prompt: “Design a quality of earnings analysis for: [company with financials]. Normalize adjustments: One-time expenses that will not recur, Non-cash charges, Related-party transactions, Aggressive accounting policy choices. What should the normalized earnings be? What discrepancies exist between reported and adjusted numbers?“

4. Legal Due Diligence Prompts

Uncover hidden legal risks.

Legal Checklist Prompt: “Generate a comprehensive legal due diligence checklist for: [company]. Include: Corporate formation and good standing, Subsidiary and affiliate entities, Material contracts (customer, supplier, employment), Intellectual property ownership and conflicts, Litigation history and pending matters, Regulatory compliance, Data privacy compliance.”

Contract Review Prompt: “Review this material contract: [paste or describe]. Identify: Unusual terms that favor the counterparty, Termination rights and notice periods, Change of control provisions, Exclusivity clauses that limit future options, Pricing mechanisms that could become unfavorable, IP assignment provisions. Flag anything that would be problematic in an acquisition.”

Intellectual Property Prompt: “Conduct IP due diligence for: [company]. Questions: Is all IP created by employees properly assigned? Are there any consulting contracts with loose IP terms? Do any open-source components create copyleft obligations? Are there any patent applications that might not issue? Are trademarks and domains properly registered and maintained?”

Litigation Risk Prompt: “Assess litigation risk for: [company]. Categories: Customer disputes (volume, typical outcomes), Employment matters (class action potential, areas of exposure), IP challenges (are they using others’ IP?), Regulatory investigations (what are regulators looking at?). What self-insurance or litigation financing is in place? What is the litigation reserve policy?”

Regulatory Compliance Prompt: “Evaluate regulatory compliance for: [company in industry]. Applicable regulations: [list]. Current compliance status: [describe]. Historical violations or citations: [describe]. What ongoing obligations exist? What changes would acquisition trigger? Are there any regulatory approvals needed?”

Data Privacy Prompt: “Assess data privacy compliance for: [company]. Frameworks applicable: [GDPR, CCPA, HIPAA, etc.]. Current compliance program: [describe]. Known incidents: [describe any breaches or complaints]. What data do they hold? Is it properly secured? What would notification obligations be if a breach occurred?“

5. Operational Due Diligence Prompts

Verify the business can scale.

Operational Checklist Prompt: “Generate an operational due diligence checklist for: [company]. Include: Production/supply chain dependencies, Key supplier relationships and contracts, Manufacturing or service delivery capacity, Quality control processes, Scalability of current operations, Technology and systems in use.”

Supply Chain Risk Prompt: “Analyze supply chain risks for: [company]. Questions: Single-source dependencies? Supplier concentration? Geographic concentration of supply? Long-term contracts with suppliers? What happens if a key supplier fails? Are supply contracts assignable in an acquisition?”

Customer Concentration Prompt: “Assess customer concentration risk for: [company]. Metrics: Revenue concentration (top 10 customers %), Largest customer dependency, Customer churn rates, Contract terms with key customers, Sales pipeline and seasonality. What happens to revenue if a major customer leaves? Is the product/service defensible?”

Competitive Position Prompt: “Evaluate competitive position for: [company]. Questions: Sustainable competitive advantages (what prevents competitors from copying)? Competitive threats on the horizon? Pricing power (can they raise prices without losing customers)? Switching costs (how hard is it for customers to leave)? What would it cost a competitor to build this business?”

Scalability Assessment Prompt: “Assess scalability of: [company]. Questions: Can current systems handle 3x, 5x, 10x growth? What is the constraint — people, systems, facilities? What capital would be required to scale? Does management have experience with this kind of growth? What breaks first under stress?”

Process Documentation Prompt: “Evaluate operational documentation for: [company]. Are key processes documented? What knowledge is held by specific individuals? What is the bus factor for critical operations? What happens when key people are unavailable? Is there succession planning for critical roles?“

6. Commercial Due Diligence

Understand market position and growth potential.

Market Sizing Prompt: “Size the addressable market for: [company’s market]. TAM: [if known]. SAM: [target serviceable addressable market]. SOM: [realistic share they can capture]. Methodology: [how was sizing calculated]. What assumptions were made? What would have to be true for projections to hold?”

Growth Drivers Prompt: “Identify the key growth drivers for: [company]. Questions: What has driven historical growth — market expansion, market share gain, new products? Is growth repeatable and predictable? What would accelerate or decelerate growth? Is growth constrained by supply or demand?”

Customer Validation Prompt: “Validate customer enthusiasm for: [company]. Questions to investigate: Net Promoter Score or satisfaction metrics, Customer interviews (what do they actually think?), Reference customers (would they buy again?), Churn reasons (why do customers leave?), Expansion revenue (are existing customers buying more?)?”

Pricing Power Prompt: “Assess pricing power of: [company]. Questions: Have they raised prices historically? What happened to volume when prices increased? How does their pricing compare to competitors? What would happen if a competitor undercut them by 10%? Are there contractual limits on pricing?”

Go-to-Market Assessment Prompt: “Evaluate go-to-market strategy for: [company]. Questions: Is the sales model proven (direct, channel, PLG)? What is the customer acquisition cost? What is the payback period? Is the go-to-market scalable? What channels are working vs. struggling? What is the ideal customer profile?“

7. Technical Due Diligence

Ensure the technology foundation is sound.

Technical Architecture Prompt: “Evaluate technical architecture for: [company]. Questions: Is the architecture scalable and maintainable? What are the key technical decisions and are they sound? What technical debt exists? How is the codebase organized? What monitoring and alerting is in place? What would a senior engineer find concerning?”

Security Assessment Prompt: “Conduct a security due diligence review for: [company]. Questions: Penetration testing history and findings, Security certifications held (SOC2, ISO27001, etc.), Data encryption practices, Access control policies, Incident response procedures, Third-party security assessments. What vulnerabilities exist?”

Data Infrastructure Prompt: “Assess data infrastructure for: [company]. Questions: Where is data stored and how is it protected? Data architecture (is it a mess or well-organized)? Privacy compliance (is PII properly handled)? What happens to data in an acquisition? Are there vendor lock-ins?”

Integration Complexity Prompt: “Estimate integration complexity for: [company being acquired]. Technical areas of integration: [list]. Systems that must integrate: [list]. Estimated integration timeline: [if available]. What technical risks exist in combining the organizations? What is the integration cost?”

Developer Assessment Prompt: “Assess the engineering team for: [company]. Questions: Team size and structure, Key technical leaders and their tenure, Developer experience and code quality, Testing and deployment practices, Documentation quality, Tools and processes in use. What would attract or repel engineers evaluating this company?“

8. HR and People Due Diligence

Verify the team is the right team.

HR Compliance Prompt: “Conduct HR due diligence for: [company]. Questions: Employment classification (employee vs. contractor), Compensation and equity practices, Benefits compliance, OSHA and workplace safety, I-9 and immigration compliance, Background check policies. What historical violations exist?”

Cultural Assessment Prompt: “Assess organizational culture for: [company]. Questions: What are the stated values vs. actual behaviors? How does leadership actually make decisions? What is the attrition rate and why do people leave? Is there diversity and inclusion programming? What would candidates find attractive vs. concerning?”

Key Person Risk Prompt: “Identify key person risk for: [company]. Questions: Who are the irreplaceable individuals? What would happen if [key person] left? Are there retention agreements in place? Is the leadership team complete or are there gaps? What is the succession plan for critical roles?”

Equity Compensation Prompt: “Analyze equity compensation for: [company]. Questions: Option pool size and grants, Vesting schedules and acceleration provisions, 409A valuations, Waterfall analysis for different exit scenarios, Any preferences that affect employee economics. Are employees clear on their equity value?”

Retention Risk Prompt: “Assess retention risk post-acquisition: [company]. Questions: Who would be likely to leave in an acquisition and why? What retention mechanisms exist? Are there change of control provisions? What motivates the key team members to stay? What did prior acquisitions of this company teach us?”

FAQ

Should I use AI for legal due diligence? Use AI to generate checklists and identify areas to investigate. Do not use AI to actually interpret legal documents — that requires a licensed attorney who understands the specific context and jurisdiction.

How do I validate financial due diligence findings? Cross-reference company-provided numbers with third-party sources. Request bank statements to verify cash. Talk to customers and suppliers to verify relationships. Have an independent CPA review accounting policies.

What due diligence should I skip for a small deal? You should not skip categories, but you can reduce depth. For smaller deals, rely more on representations and warranties with appropriate escrow. Focus due diligence dollars on the areas of highest risk.

How do I manage due diligence with a reluctant seller? A reluctant seller is a red flag. Insist on essential documents. If they will not provide something, ask why. Consider walk-away rights for material gaps. Do not let deal pressure override diligence thoroughness.

When is due diligence complete? Due diligence is complete when you have enough confidence to make a decision, understanding the trade-offs involved. There is always more you could investigate; the question is whether you have sufficient information to proceed at the agreed terms.

Conclusion

Due diligence exists to protect deal value by identifying risks before they become surprises. ChatGPT helps ensure systematic coverage across all the areas that matter — financial, legal, operational, commercial, technical, and human capital.

Your next step is to use the financial audit checklist prompt for your current deal. Customize it based on what you already know about the target. Then use the other prompts to extend coverage to all due diligence categories. The cost of thorough diligence is always less than the cost of a bad acquisition.