AI and M&A Due Diligence: Surviving 4,000 Files in a Data Room

A target company opened a 4,000-file VDR with three weeks to LOI signing. Reading every file is impossible. AI can index, summarize, and answer questions across the corpus — but every red flag needs a human pulling the actual file.

What AI does well here

• Build a searchable index of the data room with topic tags.
• Answer specific questions ('Show me all change-of-control provisions') with file citations.
• Compare contracts of the same type for outlier terms.
• Draft the diligence-issues list grouped by workstream.

What AI cannot do

• Replace privileged legal review of red-flag findings.
• Catch what's missing from the data room (the absent file is often the issue).
• Decide if a finding kills the deal — that's the principals.