Diligence settings

Diligence settings are the main control surface for signal vs. noise in Colabra. They exist at workspace scope as defaults and can be overridden on a project when one deal needs different treatment.

When teams say “the findings feel noisy” or “we are not seeing the issues we expected,” the problem is often here. These settings decide how aggressively Colabra turns extraction into actual flags.

Start with these first

If you only configure a few settings at the beginning of a deal, start here:

Setting	Why it matters first
Buyer jurisdiction	Determines how screening and jurisdiction-sensitive rules are interpreted.
High-scrutiny country codes	Controls where the entity-risk workflow applies extra scrutiny.
Evidence materiality floor	Prevents small or immaterial items from overwhelming the findings list.
Litigation materiality floor	Stops minor claims from appearing alongside truly material disputes.
Assignment / change-of-control policy	Shapes one of the most common contract-risk outputs in the product.
Key customer and supplier concentration thresholds	Controls whether concentration becomes a finding or stays background context.

If those six are wrong, the rest of the diligence output will usually feel noisy even if every other setting is perfect.

Tune the posture before you judge the output

Real deal example: same data, better signal

A smaller cross-border deal may need a lower materiality floor and tighter jurisdiction scrutiny than the firm default. If the team skips that setup, the findings list can look either empty or noisy for reasons that have nothing to do with extraction quality.

How to think about the settings

Most teams do not need to memorize every setting. It is more useful to think in four buckets:

Bucket	What it changes
Materiality	What is too small to matter
Contract policy	How clauses and edge cases are judged
Screening scope	Which jurisdictions and entities get heightened scrutiny
Financial / commercial thresholds	When concentration, ageing, QoE, and related signals become findings

Financial and accounting thresholds

Setting	What it controls
Accounting standard	IFRS or GAAP — affects how financial data is interpreted and compared
Consolidation scope	Which entities are consolidated in financial analysis
Baseline date	The as-of date for financial comparisons
Base currency	The currency used for all financial analysis and thresholds
Audited years	Which fiscal years have audited financials available
Management accounts scope	Scope of unaudited management reporting
Interim periods	Which interim periods are included in the analysis
AR aging threshold (90+ days)	Percentage of receivables aged 90+ days that triggers a finding
AR aging threshold (60+ days)	Percentage of receivables aged 60+ days that triggers a finding
Cash conversion ratio	Expected ratio of operating cash flow to EBITDA
DSCR	Minimum debt service coverage ratio before flagging
Seasonality ratios	Expected seasonal variation thresholds
Evidence materiality floor	Minimum contract or transaction value that generates findings
Litigation materiality floor	Minimum litigation amount that generates findings
Asset transaction floor	Minimum asset transaction value that generates findings

Legal and compliance rules

Setting	What it controls
Standard form contract posture	How to treat standard form agreements: as normal, downgraded, or only flagged if customized
Assignment / change-of-control policy	Whether assignment and CoC provisions are always flagged, warned, or ignored unless specific conditions exist
Expired agreement handling	How expired contracts are treated in the analysis
Termination for convenience notice	Required notice period for termination for convenience provisions
Indemnity cap (% of deal size)	Minimum indemnity cap as a percentage of the transaction value
Survival period	Expected survival period for representations and warranties
Change-of-control consent policy	Whether CoC consent requirements are flagged and how aggressively

Commercial concentration limits

Setting	What it controls
Key customer concentration	Maximum percentage of revenue from a single customer before flagging
Key supplier concentration	Maximum percentage of cost from a single supplier before flagging
Top-5 customer concentration	Maximum aggregate revenue from the five largest customers
Top-5 supplier concentration	Maximum aggregate cost from the five largest suppliers

Jurisdiction and sanctions

Setting	What it controls
Buyer jurisdiction	The jurisdiction of the acquiring entity — affects regulatory analysis
High-scrutiny country codes	Countries that trigger heightened entity screening
Sanctions screening	Whether entity screening runs and how results are weighted

Operational security

Setting	What it controls
Data deletion maximum days	Maximum acceptable data retention period in days
Require MFA for admins	Whether multi-factor authentication is required for administrative access
DR test frequency	Maximum interval between disaster recovery tests
SOC 2 certification	Maximum age of SOC 2 Type II report before flagging
SCC annex requirements	Whether SCC annexes are required for cross-border transfers
DR/BCP capacity ratio	Required disaster-recovery and business-continuity capacity ratio
Insurance expiry alert	Number of days before insurance policy expiry that triggers an alert

Workspace defaults vs. project overrides

Use workspace defaults for the firm-wide baseline your team wants on almost every deal.

Use project overrides when the transaction genuinely changes the risk posture, for example:

• a smaller deal that needs a lower materiality floor
• a cross-border deal with additional high-scrutiny jurisdictions
• an industry-specific deal that needs tighter concentration or compliance thresholds
• a deal where contract posture needs different treatment than the firm default

The right approach is: keep defaults opinionated, then override only where the deal actually demands it.