Fix, explain or clear: how to sort what diligence finds

Every diligence process produces a list of findings. The useful question is not how long the list is, but what to do about each item. We sort every finding into one of three buckets.

Fix

Something is wrong, and it can be corrected before it becomes a problem. A dissolved subsidiary still listed on contracts. A trademark that lapsed. A lien on a loan that was paid off but never released. A missing board consent for an option grant.

Fix items are usually administrative, and often quick once someone knows about them. Left alone, they become questions in the middle of a raise or a sale, when time is shortest.

Explain

Something is accurate but will raise a question. Customer concentration. A change of control clause in a key contract. A market-share number that depends on how the market is defined.

Explain items should not be hidden. They need a short, factual answer, prepared in advance, with the documents that support it.

Clear

Something was checked and holds up. Owners and counterparties screened with no matches. Registry filings that match the cap table. Clear items matter too: they are evidence, and they let a deal team spend its time on the items above.