Learn Guide
How to Structure Deals to Survive Due Diligence
Structure before submission prevents deal failure.
DD does not kill deals. Poor structure does.
Due diligence is designed to validate, not to approve. When a deal fails at DD stage, the cause is almost always structural: the deal was not built to withstand scrutiny. The valuation was optimistic, the exit was aspirational, the budget had no contingency, or the legal structure created complexity that slowed the process beyond the timeline.
Structure for every risk vector
Structure for valuation volatility
Build LVR buffers into every deal. If a deal only works at exactly the right valuation, it is fragile. Structure for the valuation you might get, not the one you hope for. A 5-10% valuation buffer is not conservative — it is realistic.
Structure for QS scrutiny
Quantity surveyors interrogate budgets. If the contingency is too thin, or the build cost assumptions do not match current market pricing, the QS report will flag it. This creates re-assessment risk. Structure budgets with defensible contingencies and realistic cost assumptions.
Structure for a defensible exit
The exit strategy must be time-aligned with the loan term and supported by evidence. Saying the borrower will sell or refinance is not enough. What evidence exists that the market supports that exit within that timeframe?
Structure for capital stack alignment
Every layer of the capital stack needs to align: consent requirements, priority positions, enforcement rights, and maturity dates. Misalignment in any of these creates risk that surfaces during DD or legal review.
Why structuring is credit management
Structuring is not the borrower's job. It is not the fund's job. It is the credit management layer's job — to ensure every deal is built to survive the process it will be subjected to. That is what we do.
Key takeaway
Structure before submission. Every deal should be built to withstand valuation volatility, QS scrutiny, and legal complexity before it touches a credit committee.
Apply this to a real deal
Why: Pre-submission structure checks prevent the most common causes of DD failure.
Do: Check each structural element that applies to your deal.
Output: A DD-readiness score that shows whether the deal is ready for submission.
DD Survival Checklist
Step 4 of 8 — Ensure your deal survives due diligence.
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