The OHADA SME Due Diligence Playbook

Outcome

Turn diligence into a documented decision process, not an unlimited file-collection exercise.

This playbook provides an OHADA-compatible frame but does not replace country-specific legal, tax, employment, environmental or sector diligence.

1. Workflow

Scope -> Request -> Evidence -> Test -> Issue -> Impact -> Resolve/Accept -> Decision

2. Eight workstreams

Corporate & ownership

Review entity, RCCM, constitutional documents, ownership, beneficial owners, corporate approvals, authority, subsidiaries, shareholder arrangements and transfer restrictions. AUSCGIE provides the corporate framework; transaction-specific formalities require counsel review.

Financial & quality of earnings

Reconcile statements, ledgers, revenue, margins, non-recurring items, debt, cash, working capital, capex and commitments. AUDCIF/SYSCOHADA provide the accounting framework; transaction QoE is different from statutory audit.

Tax

Map filings, audits, liabilities, withholding, VAT, incentives, disputes and related-party matters. Tax conclusions are country-specific.

Commercial

Analyse customer concentration, contracts, retention/churn where relevant, pricing, discounts, pipeline, channels, competition and dependencies.

Contracts & legal

Material contracts, leases, financing, security interests, change-of-control clauses, IP, insurance, disputes and consents.

People

Organisation, key people, contracts, compensation, founder dependency, employment disputes and succession. Employment law requires national review rather than a single currently applicable OHADA employment code.

Operations, assets & technology

Facilities, equipment, ownership, maintenance, capacity, inventory, IT systems, cyber controls, software licences, critical suppliers and capex.

Permits, compliance & sector regulation

Licences, permits, authorities, HSE/ESG where relevant, investigations, sanctions and sector obligations.

3. Evidence statuses

MISSING_EVIDENCE, MANAGEMENT_ASSERTION, CONTRADICTORY_EVIDENCE, UNRESOLVED_CALCULATION, PROFESSIONAL_VALIDATION_REQUIRED, VERIFIED, APPROVED_JUDGEMENT, NOT_FOR_RELEASE.

4. Issue register

A checklist tells you what was requested. An issue register tells you what could change the deal.

Each issue should include description, source, factual severity, uncertainty, owner, action, date and possible link to price / SPA / CP / financing / integration.

Do not apply a red rating without explaining the mechanism.

5. Escalation triggers

Unclear title to shares/assets, material dispute, unreconciled debt/security, uncertain sector licence, potentially material tax exposure, cash flow inconsistent with the model, undisclosed critical dependency, or sensitive data requiring a clean team.

6. Recommended sequence

Phase 1 - confirmatory scope. Test questions capable of stopping the deal first.

Phase 2 - full diligence. Deepen areas that can change price, documents or financing.

Phase 3 - resolution. Each issue is resolved, accepted, allocated contractually, turned into a condition, reflected in price, or leads to withdrawal.

7. Roles

The buyer decides whether to proceed. Experts provide scoped professional judgement. The seller responds and provides evidence. DealPME orchestrates workflow and traceability rather than replacing professional advisers.

8. Exit checklist

• critical requests answered;
• material contradictions resolved or accepted;
• issue register owner-reviewed;
• model assumptions updated;
• contractual consequences identified;
• financing conditions aligned;
• integration risks transferred into Day 1/100 planning;
• proceed/withdraw decision documented.

9. Diligence coverage matrix

10. Handling contradictions

1. Record both sources without choosing arbitrarily.
2. Identify primary versus derived evidence.
3. Require an explicit reconciliation from the owner.
4. Test the reconciliation against independent evidence where possible.
5. Document the conclusion and remaining uncertainty.
6. Update model, price, documents or integration plan if needed.

A contradiction is not automatically fraud. It is a diligence signal that requires resolution before a conclusion is drawn.

11. Quality of earnings - baseline questions

Transaction review should isolate sustainable earnings: non-recurring items, personal/related-party expenses, accounting policy changes, unusual revenues, deferred costs, maintenance CAPEX, seasonality, concentration, cut-off, aged receivables, slow stock and normalized working capital. Adjustments require evidence; they should not be called “normal” by preference alone.

12. Tax diligence - scope discipline

Tax law is national. The playbook may organize evidence: returns, payments, audits, reassessments, agreements, withholding, VAT, customs, related parties, incentives, employee tax and transaction tax. The conclusion belongs to qualified advisers in the relevant jurisdiction.

13. Legal diligence follows structure

Legal diligence should start from the contemplated structure. In a share deal, focus on the entity and change-of-control consequences. In an asset deal, ownership and transferability of the perimeter become central. See A03 for the structural distinction.

14. Clean team and sensitive data

Before disclosing named customer data, detailed compensation, trade secrets or competitively sensitive terms, test whether an aggregate view is sufficient. If not, define restricted group, purpose, duration, output rules and sharing restrictions. Trigger competition/legal review where needed.

15. Deal Impact Register

Every material issue should answer: observed fact, source, uncertainty, impact scenario, owner and required decision. Then map it to one or more destinations: price / SPA / indemnity / CP / financing / Day 1 / integration / walk-away.

16. Decision meeting

The final diligence meeting should not reread workstreams. It should decide: which risks disappeared? which remain? which are acceptable? which price/term changes are justified? which conditions must be satisfied? does financing remain available? can the post-close plan absorb the risks?

17. Final evidence pack

Retain final scope, request list, evidence index, Q&A, issue register, professional conclusions, updated model, proceed/stop decision and issues transferred into SPA/closing/integration. This makes the decision reconstructible later.

18. Anti-patterns

• requesting every possible document without a hypothesis;
• marking management assertion as verified evidence;
• confusing statutory audit with transaction QoE;
• treating missing document as evidence that risk is absent;
• using risk scores without mechanism;
• allowing experts to work outside the central register;
• ending diligence without transferring issues to contract, financing or integration.

This resource explains; it is neither legal, tax or financial advice nor a formal valuation. Have your situation validated by a professional.