Very intriguing question. The perfectionist’s answer would be “Not ethical. Don’t even do it”. There is a serious ethical question that needs to be answered about the target and its management.
Nevertheless, but in practice this might be the case in some jurisdictions or with many startups technology-based companies. One of the great ideas presented in the course was to segment the transaction into short but sure deals each having covenants along the timeline. Throughout the process the acquirer needs to build/outsource accounting and auditing capabilities to reach the level deemed sufficient.