Every material issue, with its evidence and its impact on value.
The red-flag report is the core of every engagement. It is not a summary of the data room. It is a ranked list of issues, each verified by a reviewer and supported by a citation that opens to the source page in two clicks.
Project Atlas / Red-flag report / Version 1
Business day 3
Findings ranked by estimated impact
| # | Finding | Severity | EBITDA impact | Citations |
|---|---|---|---|---|
| 01 | Channel inventory supporting reported growth | High | $0.8M to $1.4M | 5 |
| 02 | Retailer rebates accrued below contract rates | High | $0.7M to $1.0M | 7 |
| 03 | Freight costs capitalized into inventory | Medium | $0.3M to $0.5M | 4 |
| 04 | Related-party lease above market rent | Low | $0.1M to $0.2M | 3 |
| 05 | Litigation schedule is incomplete | Medium | Referred to counsel | 2 |
Unsized findings follow sized ones. All findings reviewed and approved before delivery
Ranked by dollar impact, so the first page of the report is the one that matters.
What each finding contains
- The issue, stated in one or two sentences
- The evidence: the documents and pages involved, or the external source
- The reviewer's note: why it holds, and anything that could explain it
- The estimated impact: an EBITDA and valuation range (see price-impact ranges)
- The next step: the document to request or the question to ask
How findings are ranked
By estimated dollar impact first, then by confidence. Findings that cannot yet be sized, such as litigation referred to counsel, follow the sized ones. The top of the report is what your deal partner reads before the next call with the seller. The bottom is what your associates work through during the week.
What it gives your team
01
An early read on the deal
Within the first week of exclusivity you know whether the thesis is holding, weakening, or broken, while there is still time to act on it.
02
Focused follow-up
Associates move from sampling the data room to pursuing specific, cited issues.
03
A document the IC can trust
Every claim is sourced and reviewed, and each citation opens to the source page, so a finding can go into the investment memo with its evidence attached.
04
Fewer surprises after closing
Financial statement breaches are among the most frequent and most expensive claims under representations and warranties insurance. They cost least to identify before signing.
Discuss a transaction under LOI.
Share the sector, the deal size, and the end of exclusivity. We respond within one business day with an assessment of fit and the proposed scope of the report.