Legal due diligence (LDD) has a bad reputation, and often for good reason. When it is poorly managed, it becomes long-winded, adversarial and costly, while adding surprisingly little value to the actual deal. Done properly, though, LDD is one of the most powerful tools a buyer has. It should inform price, shape deal protections and flag the issues that genuinely matter without drowning everyone in noise.

At Impact Lawyers, we see LDD as a commercial exercise first and a legal one second. Here are five practical principles we apply when supporting buyers through acquisitions.

Start with a tailored approach (not a generic checklist)

The fastest way to irritate sellers, and waste time, is to fire over a generic due diligence questionnaire that doesn’t reflect the reality of the target business.

A tailored LDD questionnaire sets the tone for the entire transaction. If the target does not hold stock, asking pages of questions about stock and work-in-progress helps no one. It signals that the buyer’s advisers don’t understand the business, and that undermines trust early.

Your lawyers should take time to understand:

• how the target actually makes money
• what assets and risks really matter
• where value is likely to sit (or leak)

The same applies to follow-up enquiries. Every question should be relevant, specific and capable of being answered meaningfully. If it does not advance decision-making, it probably doesn’t belong in the process.

Do not open the data room too early

One of the biggest efficiency killers in LDD is diving into a half-built virtual data room. Where the timetable allows, we recommend that buyers only ask their lawyers to start LDD once the data room is:

• substantially populated (as a rule of thumb, 80%+)
• properly organised and indexed
• supported by completed responses to the LDD questionnaire

This expectation should be communicated clearly to sellers and their advisers upfront. If the data room is not ready, then it is entirely reasonable to push back.

Why this matters:

• your lawyers won’t need to keep revisiting documents
• costs are easier to control
• responsibilities are clear on both sides

It also avoids the familiar end-stage frustration where delays are blamed on “ongoing due diligence” that never had a fair chance to run efficiently. If timings are tight, agree priorities early. Be explicit about which areas need to be addressed first and why.

Be clear on scope (and stick to it)

Before any meaningful review begins, buyers and their lawyers should agree:

• who is reviewing which areas
• what level of detail is actually required
• what “material” means for this deal

Many buyers prefer to handle parts of diligence in-house, particularly HR, insurance or customer contracts, where they already have strong commercial insight. That can be sensible and cost-effective, as long as roles are clear.

The real risk comes when assumptions are made. If lawyers are not sure what matters most to you, they should ask. This is not a game for guessing. Good LDD is collaborative and dynamic. Regular check-ins help ensure reporting stays focused on what actually moves the deal, not on theoretical risks with no commercial impact.

Agree the format of the LDD report upfront

There is no standard LDD report. And there shouldn’t be. Some buyers want detailed analysis. Others want a concise overview. Many prefer a clear “red flag only” report focused on material issues.

What matters is being explicit about:

• the format you expect
• the level of detail required
• how the report will be used in negotiations

If the deal will be supported by warranty and indemnity insurance, the insurer’s requirements also need to be factored in. A clear, well-structured LDD report reduces follow-up questions and speeds up underwriting.

To avoid scope creep and unexpected costs:

• agree reporting boundaries at the outset
• ask to be notified before any scope or cost changes
• limit the reporting process to a sensible number of drafts

In most cases, two drafts are more than enough.

Focus on what matters: issues, impact and actions

• a clear summary of material risks
• practical recommendations to address them
• an explanation of how they affect price, structure or protections

That might include:

• actions the seller needs to take pre-completion
• additional warranties or indemnities
• adjustments to completion mechanics
• protections for known information gaps

If a legal issue could affect valuation, it should be clearly called out. Equally important are post-completion actions; what needs to be fixed, integrated or cleaned up once the deal completes to reduce ongoing risk.

Detailed contract summaries have their place, but usually as schedules at the back of the report. The front should be reserved for insight, judgment and recommendations so decision-makers can see the wood for the trees.

Final thought: Legal due diligence should help buyers make better decisions. When LDD is focused, proportionate and commercially grounded, it becomes a strategic advantage rather than a necessary evil. That is the approach we take at Impact Lawyers: practical, buyer-led and grounded in common sense.