Post-war recovery due diligence: corporate finance perspective

This paper develops a practical Due Diligence framework for post-war recovery projects that links three pillars: risk profile of the asset and context (security, supply-chain, legal, operational, sanctions, anti-money laundering), deal architecture that allocates and prices those risks and institutional moderators (rule-of-law quality, procedural transparency, donor coordination). We show how diagnostic findings must translate directly into the term sheet: covenants, security packages, staged disbursements and milestones, reserve accounts, step-in rights, guarantees and insurance, foreign exchange hedges – thereby lowering uncertainty premia, reducing weighted average cost of capital and improving net present value. Aligning with Build Back Better and embedding environmental, social and governance criteria through measurable action plans (KPI-based management, transparent procurement, independent audit) functions as financial engineering that mitigates long-horizon regulatory, social, and climate risks. The paper proposes a set of KPIs for operationalization and treats donor standardization as a market-supporting public good that cuts transaction costs and accelerates deal closing. We discuss boundary conditions (weak enforcement and poor data quality) and provide standpoint for investors, lenders and public authorities on calibrating risk-mitigation packages across sectors and recovery phases. Our contribution is to recast Due Diligence as “deal engineering” under systemic risk, integrating corporate finance with ESG and institutional capacity. Limitations include data gaps and uneven enforcement. Nonetheless, the framework is implementable using conservative buffers and standardized checklists. Future research should quantify the marginal cost-of-capital impact of specific mitigation levers and donor coordination, and pilot sector-specific term-sheet templates in Ukraine and comparator economies.