Due Diligence in M&A

M&A deals are exhilarating, but the downside risk is real. Decades of research suggest a large share of transactions fail to create value for acquirers, often because material issues are missed before close or surface during integration. Harvard Business Review has long cited a 70–90 percent failure range, reinforcing the need for deeper, faster, and more continuous diligence. Harvard Business School

This is where AI-powered market intelligence changes the game. Rather than relying primarily on static data rooms and manual searches, modern deal teams can scan live disclosures, market signals, and regulatory updates to surface red flags early, monitor them in real time, and document decisions for auditability. Below is a practical playbook for using AI-driven market intelligence to find what others miss, illustrated with how Avantis structures this work for deal and compliance teams.

Why “always-on” diligence matters

Markets move faster than diligence checklists. In volatile conditions, Bain notes that winners run deeper diligence sooner and focus on proprietary insight, not just data room materials. The best teams initiate diligence early, concentrate on the deal’s true value thesis, and use technology to move faster than rivals.

At the same time, regulatory exposure is growing. The U.S. has introduced new tools such as the Foreign Extortion Prevention Act and a DOJ M&A Safe Harbor policy, with enforcement leaders urging companies to bring more technology and data analytics to compliance and post-deal remediation. Sanctions and anti-bribery rules carry successor liability risk, which means pre-close detection and mitigation are essential.‍

A red-flag framework you can operationalize with AI

Think of diligence as a living system rather than a checklist. Use AI-powered market intelligence to frame hypotheses, gather evidence fast, and keep high-risk items on watch through signing and close.

1) Financial health and disclosure integrity

What to test: Unusual revenue recognition, working-capital swings, contingent liabilities, going-concern language, asset impairments, related-party transactions, and auditor changes. Leading red-flag lists consistently include inconsistent financials, unexplained line items, and off-balance-sheet exposures. (Merger Integration)

How market intelligence helps: Avantis lets teams run precise, criteria-based searches across SEC and SEDAR filings to surface these signals quickly, then set real-time alerts for new 10-K/10-Q/MD&A/AIF language or insider-transaction changes that could alter your thesis. The platform emphasizes content search with customizable filters and monitoring so analysts can zero in on the disclosures that matter.

2) Legal, compliance, and enforcement exposure

What to test: Sanctions risks, anti-bribery/anti-corruption exposure, export-controls issues, environmental proceedings, and material litigation. Sanctions rules apply strict liability and can attach through successor liability in M&A, so diligence and documentation are critical.

How market intelligence helps: Avantis supports risk analytics by scanning disclosures and governance documents to uncover legal and regulatory risks, then notifying your team of new filings or regulatory developments tied to the target and its ecosystem. That creates an evidence trail that is time-stamped and shareable across legal, compliance, and deal teams.

3) Governance and insider behavior

What to test: Board turnover, executive departures, insider selling, compensation misalignment, and related-party arrangements. Patterns in insider transactions and governance footnotes often foreshadow post-close surprises.

How market intelligence helps: Avantis monitors insider transactions and enables competitor and peer benchmarking through 10-K/10-Q analysis, helping teams spot anomalies or trend breaks early.

4) Competitive dynamics and market position

What to test: Shifts in customer concentration, pricing pressure, contract losses, regulatory headwinds, or new entrants. You want a line of sight into what rivals disclose and how the target’s positioning evolves deal-to-deal.

How market intelligence helps: Avantis’ market-intelligence and competitive-analysis workflows aggregate corporate disclosures, financial data, and public filings for side-by-side comparisons, giving deal teams rapid peer context instead of one-off document pulls.

5) Country and sector risk

What to test: Exposure to sanctioned jurisdictions, supply-chain constraints, commodity volatility, and regulatory changes that could alter the pro-forma forecast. A more demanding enforcement environment and cross-border volatility require proactive surveillance.

How market intelligence helps: With real-time monitoring across filings and corporate news, Avantis keeps high-risk topics on watch lists so you can validate or revise assumptions as the deal advances.

Turning signals into decisions: A practical workflow

Step 1: Build a live risk map. Start with hypotheses tied to the deal thesis. Use Avantis’ content search and customizable filters to pull disclosures on the exact risk factors you care about, like litigation, revenue concentration, or off-balance-sheet arrangements. Tag findings by severity and owner.

Step 2: Scan for hidden issues across filings. Run full-text searches across SEC and SEDAR to uncover red-flag language in MD&As, AIFs, and footnotes. Avantis empowers M&A teams with the ability to uncover hidden patterns with fully cited responses, which helps teams distinguish noise from signal and preserve a clean audit trail.

Step 3: Put risks on alerts. Convert open questions into alerts. If the target’s 10-Q risk factors change, a new 8-K hits, or an insider trade posts, the team should know immediately. Avantis supports real-time alerts on filings and insider activity so diligence does not stall between set-piece meetings

Step 4: Benchmark against peers. Context matters as much as the absolute number. Track peers’ filings and disclosures to understand whether a risk is idiosyncratic or sector-wide. Avantis emphasizes monitoring competitors and benchmarking through 10-K/10-Q tracking, which sharpens your valuation and integration assumptions.

Step 5: Close the loop with documentation. Regulators and boards expect a clear record of what was checked and why decisions were made. Bain’s guidance on “deeper, sooner” diligence and Deloitte’s commentary on today’s enforcement posture underscore the need for disciplined documentation and continuous improvement.

What “good” looks like in an AI-enabled diligence readout

• Evidence-based narrative. Summarize the value thesis plus the specific disclosure-backed risks that could impair it. Use cited excerpts from filings rather than impressions.
• Materiality-driven triage. Group red flags by severity, probability, and mitigation path. Highlight items that are price-, structure-, or go/no-go-relevant.
• Peer-relative context. Show how the target’s metrics and risk language compare to peers to avoid over- or under-reacting.
• Regulatory preparedness. Document sanctions, ABAC, and export-control testing, noting successor-liability considerations and any remediation plans. (Financier Worldwide)
• Monitoring plan to close. Keep active alerts through signing, regulatory review, and close so new disclosures cannot blindside the integration team.

Where Avantis fits

Avantis positions itself as a market-intelligence platform purpose-built for investment research, competitive analysis, due diligence, and risk monitoring. It brings together content search across SEC and SEDAR filings, corporate disclosures, financial and market data, and then layers on customizable filters, AI-supported content analysis, and real-time monitoring and alerts. For diligence teams, that means faster discovery of deal-critical disclosures like litigation, related-party transactions, and asset write-downs, with fully cited responses and team-friendly collaboration.

Crucially, the value is not about a longer feature list. It is about outcomes that reduce risk and increase confidence:

• Speed to insight. Get to the few pages that matter in hundreds of filings.
• Fewer blind spots. Keep high-risk topics on watch so late-breaking disclosures cannot surprise you.
• Stronger governance. Maintain an auditable record of what was reviewed, when, and by whom.
• Sharper decisions. Benchmark risks and operating metrics against peers to refine price, structure, and integration plans.

If you are building a diligence motion that is faster, deeper, and better documented, Avantis’ market-intelligence approach is designed for exactly that use case.

Most deals fail to meet expectations, which is precisely why modern diligence must be continuous, data-driven, and tied to the value thesis. AI-powered market intelligence helps you surface red flags early, watch them in real time, and prove you acted on the evidence. That is how acquirers improve their odds when the stakes are highest.

If you are ready to operationalize this approach, explore how Avantis enables real-time diligence across SEC and SEDAR disclosures, insider activity, and market data, with alerts and collaboration built in for deal and compliance teams.