Use case · Private capital
Read the whole data room, not a sample of it.
Diligence agents index every document in the virtual data room, pull out the contract terms that move value, reconcile the numbers across sources and draft a red-flag memo in which each point cites a page. The deal team and advisers weigh what it means.
For deal partners and operating teams at private equity and private credit firms running confirmatory diligence on competitive timetables.
Ten days of confirmatory diligence
A 3,000-document data room, worked two ways.
The same data room, the same deal team, the same external advisers. What changes is who does the first read.
Manual first pass
Data room opens. Associates export the index and split folders between themselves and the advisers.
Commercial contracts are sampled by value, because there is no time to read the long tail of smaller agreements.
Revenue in the management accounts does not tie to the audited figures. An associate spends the day building a bridge by hand.
Seller uploads a new folder of customer contracts. Nobody is certain which ones were already reviewed.
Legal adviser's draft report flags a change-of-control clause in a top-ten customer contract. The deal team hears of it for the first time.
Investment committee paper goes out with open questions noted as "to be confirmed post-signing".
Agents do the first read
Agents index and classify every document, flag duplicates and map what is missing against the diligence request list.
Change-of-control, assignment, exclusivity and termination terms are extracted from every commercial contract, not just the largest.
Revenue is reconciled across management accounts, audited accounts and the customer list, with each difference linked to its source pages.
First red-flag memo circulated to the deal team and advisers, every point carrying a document and page reference.
New seller uploads are processed on arrival, and the memo shows what changed since the last version.
Advisers test the flagged points and add judgement. Associates spend their time on management questions, not on finding pages.
What the agents do
From raw folders to a cited memo.
Several specialised agents share the work, each producing output that a person can check against the source.
Conceptual flow, not a live system or measured result.
Index and classify the room
Agents read every file the data room permissions allow, including scanned PDFs, spreadsheets and presentations. Each document is classified by type, counterparty, date and whether it is signed, draft or superseded. Duplicates and near-duplicates are grouped. The index is checked against your diligence request list, so gaps show up on day one rather than day eight. As the seller adds or replaces files, the index updates and records exactly what changed and when.
Extract terms and reconcile numbers
Contract agents pull out the clauses your deal team cares about: change of control, assignment, exclusivity, most-favoured-nation, termination rights, liability caps and unusual indemnities. Each extraction quotes the clause and cites the page. Financial agents compare revenue, margin and customer figures across management accounts, audited statements, the model and the customer list, and show every difference with its sources side by side. Where a figure cannot be traced, it is marked as untraced rather than estimated.
Draft the memo, answer questions
A drafting agent assembles a red-flag memo ordered by the deal team's priorities, with every point linked to the document and page behind it. Deal team members can ask follow-up questions in plain language, such as which customer contracts allow termination on a change of control, and receive answers with page references they can open. The agents do not assess materiality or price impact. Those judgements belong to the deal team and advisers, who annotate and sign off the memo.
Options for the first read
Where people, search tools and agents each earn their place.
Diligence agents extend the team and its advisers. They do not replace the professional judgement or the reliance that advisers provide.
| Criterion | Associates + advisers | VDR search & keyword tools | Diligence agents |
|---|---|---|---|
| Coverage of a large room | Sampled by value under time pressure | Full, but only for terms you think to search | Every permitted document read and classified |
| Clauses with unusual wording | Recognised by experienced lawyers | Missed if the keyword differs | Found by meaning, then checked by a person |
| Judging materiality | Strongest: context, precedent and commercial sense | None | None: flags and cites, leaves weighting to the team |
| Reconciling numbers across sources | Thorough but slow and manual | Not supported | Differences listed with sources side by side |
| Late seller uploads | Tracked by hand, easily missed | Searchable once indexed | Processed on arrival with a change log |
| Reliance and liability | Advisers provide reports you can rely on | None | None: supports advisers, does not replace their reports |
| Setup effort per deal | Staffing and scoping | Minimal: built into the VDR | Access agreement, request list and priorities to configure |
Judge it on a live deal
Five measures for your first trial.
Agree these before the data room opens, so the evaluation reflects real deal conditions rather than a demonstration.
- 01Citation accuracy
- The share of sampled memo points whose cited page actually supports the statement made.
- A memo is only useful if the deal team can trust its references without re-reading the room.
- 02Red-flag recall against adviser reports
- Of the issues raised in the final legal, financial and commercial adviser reports, how many the agents had already flagged, and when.
- Shows whether the agents surface what matters, and how early.
- 03Time to first memo
- Elapsed time from data room access to a first red-flag memo the deal team is willing to circulate.
- Early visibility is what changes the questions put to management.
- 04Question turnaround
- Time from a deal team question to a cited answer, tracked across the whole diligence period.
- Tests whether the system is useful day to day, not only for the first memo.
- 05Document coverage
- The share of documents in the room that were read, classified and considered, with a list of those that could not be processed and why.
- Makes the limits of the review explicit, so nobody assumes coverage that did not happen.
Not every deal
Deals where agents add little.
- The data room is small enough for the team to read in full within the timetable. Agents add set-up work without adding coverage.
- The seller's data room terms prohibit export or automated processing and cannot be varied. We only work within the access the NDA and data room rules permit.
- You need a report you can rely on legally or present to lenders as independent diligence. That comes from your advisers; agents can support their work but do not replace it.
- Your firm has no approved position on processing deal-confidential material with AI systems. Agree that with your compliance and IT teams before the next process starts.
Deal team questions
Confidentiality, access and accuracy.
Does this breach our NDA or the data room terms?
It must not, so we check first. Many NDAs and data room rules restrict downloading, copying or sharing with third parties. We review the terms with your counsel and, where needed, agree the approach with the seller's adviser before any processing. Agents run inside your environment or a ring-fenced tenancy, which avoids adding a new recipient of the data.
Which data rooms do the agents work with?
The agents work from whatever access the data room allows: bulk export or, where the provider and seller permit it, an API. For platforms such as Datasite, Intralinks, Ansarada and Firmex we confirm the route during scoping, because it depends on the seller's settings. Where only viewing is allowed, options are narrower and we will tell you so up front. Your internal document stores and deal CRM can be connected for context from earlier processes.
Is our deal data used to train models?
No. Deployments use model endpoints configured not to retain or train on inputs, hosted in the region you choose. Each deal is held in its own workspace, access follows your deal team membership and information barriers, and material is deleted or archived under your retention policy when the process ends.
How accurate is the memo?
It is a first draft, not a finding. Every point carries a page reference so it can be checked quickly, and we measure citation accuracy and recall against adviser reports on each deal. We do not promise an accuracy level in advance; poor scans, handwritten amendments and unusual formats all affect results and are flagged when they occur.
Do the agents replace our legal and financial advisers?
No. Advisers give professional judgement, sector context and reports your lenders and investment committee can rely on. The agents give the deal team and advisers a faster, fuller first read and a way to ask questions of the room. The aim is to move adviser time from finding documents to judging them.
What drives the cost of a deal deployment?
The size and format of the data room, the number of languages, how many clause types and financial reconciliations you want, whether the setup is reused across deals and your hosting requirements. A firm-wide deployment reused across processes costs less per deal than a one-off configuration.
Go deeper
The pieces behind this workflow.
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shayan@coldai.orgLast reviewed 25 September 2026.