MOLTON Publishes the Pinnacle of Legal DD x AI as Lawyers Highly Evaluate AI Auto-Generation of Legal Due Diligence Reports as 'Usable Almost As-Is'

MOLTON Inc. (formerly a23s Inc.) (Location: Chuo-ku, Tokyo, Representative Director and Attorney [Japan & NY State, USA] Yasufumi Sakiji, hereinafter MOLTON), providing the legal AI+BPO service "Cloud Legal" (URL: https://www.cloudlegal.ai/) and acting as the domestic pioneer of ALSP (Alternative Legal Service Provider) corporate legal outsourcing services equipped with generative AI via Contract/Legal BPaaS, has announced the establishment of a technology that allows AI to automatically generate a full 60-page legal due diligence (Legal DD) report in M&A (Mergers and Acquisitions).

The generated DD report has been evaluated by lawyers as "usable almost as-is," achieving a practical quality that comprehensively covers risk identification, classification, and SPA (Share Purchase Agreement) policy recommendations.

In this release, we are publishing a sample of the DD report (partial pages), and those who have a meeting with us will be presented with the full text of the DD report sample (all 60 pages).

【 Background: Why the automatic generation of legal DD reports is important 】

Legal Due Diligence (Legal DD) is an essential process in M&A to closely examine the legal risks of a target acquisition company and reflect them in the transaction terms. However, traditional Legal DD requires lawyers to individually scrutinize hundreds to thousands of contracts, minutes, and registration documents, which in large-scale projects took weeks to months and cost tens of millions of yen.

Amidst the recent increase in M&A transactions, the increasing complexity of cases, and a competitive environment that demands speed, the acceleration and cost optimization of Legal DD has become an urgent management issue for companies.

MOLTON has been providing early legal DD response services to major companies listed on the TSE Prime Market and large law firms since 2025, halving the man-hours required for contract review through a dual-check system by AI and lawyers. The DD report automatic generation technology released this time is a further evolution of these efforts.

Quality of the AI-generated DD report ― Key evaluation points by lawyers

The DD report sample "PJ Phoenix" released this time assumes a 100% share acquisition project of a startup company (Company A) that provides an AI-equipped cloud accounting SaaS. As a result of lawyers evaluating the quality of the report, it was judged to have reached practical standards in the following aspects.

■ Comprehensiveness of structure: Covers all 7 categories: Corporate Organization/Governance, Shares/Capital, Business/Licenses, HR/Labor, Assets/Liabilities, Litigation/Disputes, and Others (Personal Information Protection/Information Security, etc.). It covers the standard structure of a DD report used in practice.
■ Accuracy of risk assessment: Classifies 19 risks into 4 levels (Extremely High, High, Medium, Low) and analyzes each risk in a three-part structure: "Confirmed Facts," "Risk Assessment," and "Response Policy." Accurately captures frequent issues in M&A practice, such as the absence of Drag-along clauses, tax accountant law risks in bookkeeping agency services, and the worker status of individual business contractors.
■ Specificity of SPA policies: Provides specific recommendations up to the design of the seller structure (distinguishing between management shareholders and investors), recommendations for special compensation clauses, and conditions precedent (CP) for closing.