Due Diligence Timeline

Due Diligence Timeline

Why Getting the Timing Right Makes or Breaks Your Deal

If you are leading a business, you already know that every major decision involves risk. Whether you are about to acquire a competitor, invest in a startup, or enter a joint venture, your success often hinges on one critical factor: when you carry out your due diligence.

Legal due diligence is not just another item on your checklist. If you time it right, it becomes your edge. Get it wrong and you will pay for it, sometimes for years. One of the biggest mistakes I see is executives treating due diligence as a formality or leaving it until the very last minute.

Let us talk plainly about why timing matters and what it actually looks like in practice.

The Critical Moments When Due Diligence Needs to Happen

The Golden Rule

You need to finish your due diligence before you are locked in. This is the window when you can still negotiate, walk away, or insist on changes if you uncover serious issues. After you have signed binding agreements or transferred funds, your leverage disappears and so does your control over the risks.

Here in Malaysia, rushing this process or skipping steps is common. The results are always the same. You end up wasting money, suffering failed deals, and damaging your reputation. Do not let it happen to you.

Your Due Diligence Timeline: The Three Phases That Matter

Phase 1: Early Screening, Before You Even Issue a Letter of Intent

This happens before you sign anything, before the Letter of Intent or term sheet. Your aim here is to spot deal breakers fast so you do not waste months chasing bad opportunities.

At this stage, you should check the company’s standing by running searches with the Companies Commission of Malaysia, SSM.
You should look into the actual ownership of the company and confirm who really owns and controls it.
It is important to scan for any lawsuits or ongoing court actions that could present major risks.
You should review the main contracts at a high level to see if there are any immediate concerns.

Why bother? This quick check can save you from months of wasted time on fundamentally flawed businesses.

Phase 2: Full Investigation, After LOI and Before Final Agreements

Now you have shown serious interest and maybe signed an LOI. This is the deep dive. You want to uncover every major legal, financial and operational risk before you go any further.

• At this stage, you need to dig through the company’s corporate records and board minutes for any hidden issues.

• You should review the contracts that actually keep the business running, focusing on those that generate revenue, ensure supply, and involve key customers.

• It is crucial to examine all employment agreements to identify any staff-related problems or hidden liabilities.

• You must confirm that all the required licences and permits are properly in place and current.

• You need to assess the intellectual property to confirm the company really owns what it claims to own.

• You should conduct an audit of compliance with all regulations that apply to the business.

• You must check for any ongoing or potential legal disputes that could impact the deal or business value.

This phase is critical because what you find will directly affect how you price the deal, structure your agreements, and protect yourself. At this point, your leverage is at its highest.

Phase 3: Final Checks, Just Before Completion

This is your last chance to pull out or renegotiate. You must do this right before you sign the contract or transfer any money.

• At this stage, you need to repeat your company searches to make sure nothing important has changed since your last review.

• It is essential to get the final regulatory approvals in order before you proceed if this is a regulatory requirement.

• You should seek legal opinions on any last issues or uncertainties that are still unresolved.

• You must confirm that there have been no material changes to the company or the deal since you started the process.

After this, you are committed. If something comes up after this stage, fixing it will be much harder and more expensive.

The Psychology of Deal-Making: Do Not Fall Into the Sunk Cost Trap

This is the classic mistake. You have spent months and money, your team is exhausted, and you are feeling pressure to get the deal over the line. Suddenly, new risks emerge. Do you push on just to avoid “wasting” your earlier efforts?

That is the sunk cost fallacy. It is a dangerous mindset. Good leaders know when to walk away, even if it hurts in the short term. If you are now relying on hope instead of hard facts, you are making a bad decision. Full stop.

Making Decisions for the Future, Not the Past

Solid due diligence gives you the facts you need to decide based on what is ahead, not what is already spent. If you uncover serious risks, the smart move is to cut your losses early. The best leaders make decisions based on future value, not past investment.

Special Considerations: Public Companies and Regulated Sectors

If you are dealing with public companies or regulated sectors in Malaysia, such as finance, telecommunications or healthcare, timing becomes even more critical.

• Crossing shareholding thresholds in public companies will trigger mandatory announcements and regulatory filings.

• If you are operating in a regulated sector, you must complete full due diligence before even applying for approvals.

• If you try to pull out after submitting documents to regulators, you risk high costs and damage to your reputation.

The further you go in a transaction, the less room you have to fix problems. The best time to find and address risks is before you sign, file, or announce anything publicly.

Once you are past those points, you are no longer preventing risks. You are stuck mitigating them. That is a much weaker position.

Getting the Most Out of Your Due Diligence

A quality due diligence report does more than list problems. It helps you act fast and confidently.

• A good report will set out clear priorities for what needs to be fixed before completion.

• It will provide you with specific, actionable recommendations you can actually use.

• The report should highlight points you can use to negotiate better terms or extra protections.

• It should set out the measures you need to include in your final agreements to protect yourself.

  
  

Take Control: Your Due Diligence Action Plan

The business leaders who win in Malaysia treat due diligence as a must have, not a nice to have. They start early, bring in the right experts, and are never afraid to walk away if the risks outweigh the rewards. They plan for setbacks and keep flexibility in their deals.

Here is how the most successful leaders do it

• They start their due diligence as early as possible, at the first sign the deal is real.

• They bring in expert teams for complex transactions and do not rely solely on their own people.

• They maintain discipline and are prepared to walk away if the facts look bad, no matter how much they have invested.

• They build flexibility into their contracts and their timeline so they can handle surprises or setbacks.

Conclusion: Due Diligence as Your Strategic Advantage

The companies that thrive are those who act fast because they have the facts, not because they are guessing.

A strong and well timed due diligence process is how you protect your vision and make sure your next big move builds your legacy instead of putting it at risk.

If you want to conduct due diligence on a target company, be sure to contact us. We would be happy to explore and discuss how we can assist you.