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