DUE DILIGENCE
Due Diligence | Verification Diligente
What is Preliminary Legal Due Diligence?
- Preliminary legal due diligence is a thorough process of analyzing a company’s or party’s information involved in a transaction. It is critical for assessing risks, verifying assets and liabilities, and ensuring the viability of a transaction. This process is particularly relevant during mergers, acquisitions, investments, or licensing agreements.
When Does Legal Due Diligence Occur?
- It can take place before or after a transaction is concluded. If conducted afterward, the agreement must include a suspensive condition allowing the transaction to be canceled if issues are identified.
Why is it Essential?
- This process helps identify and mitigate potential risks, avoid costly surprises, and understand the company’s market position. In case of critical risks, due diligence allows halting discussions before further investment.
The Preliminary Legal Due Diligence Process
- Non-Disclosure Agreement (NDA): Protects the confidentiality of shared information.
- Checklist or Questionnaire: Prepared by the buyer’s attorney to request financial, legal, and operational documents.
- Expert Analysis: Lawyers, along with financial or technical specialists, review the provided documents.
- Final Report: The attorney compiles findings, identifies risks, and provides recommendations for negotiating or adjusting the agreement.
What is a Legal Due Diligence Checklist?
- The requested information varies by transaction but often includes:
- Company Structure: Certificates of incorporation, bylaws, shareholder agreements, etc.
- Finances: Tax returns, balance sheets, accounts receivable and payable, salaries.
- Contracts: Loans, leases, employment contracts, partnership agreements.
- Intellectual Property: Licenses, patents, trademarks, litigation.
- Legal Compliance: Permits, zoning, regulatory filings.
Objectives and Impacts
Effective due diligence reduces risks and ensures fair conditions for both parties. It also allows for negotiating purchase price adjustments or including warranties to protect the buyer’s interests. As each transaction is unique, relying on experienced legal advisors is essential to conduct this process and negotiate an optimal agreement.
Due diligence is a critical step in securing commercial transactions, whether for mergers, acquisitions, or asset purchases. This procedure evaluates the legal, financial, and operational risks associated with acquiring a company or asset, ensuring operational continuity post-transaction.
Why Conduct Due Diligence?
- Reduce Transactional Risks: Identify potential risks and minimize future disputes.
- Protect Assets: Verify the integrity of assets before purchase, including rights registered with the RDPRM and Land Registry.
- Regulatory Compliance: Ensure the target company meets its tax and legal obligations.
- Evaluate Financial Commitments: Verify debts, ongoing contracts, and potential liabilities.
- Validate Contractual Obligations: Review employment contracts, commercial agreements, and financial commitments.
- Analyze Legal History: Identify ongoing or potential litigation and assess their financial impact.
- Acquirer’s Liability: Understand the responsibilities assumed when acquiring the company or asset.
Our Services Include
- Analysis of commercial contracts and contractual obligations
- Verification of legal history and ongoing litigation
- Review of corporate books and records
- Assessment of tax risks and withholding obligations
- Verification of rights registered with the RDPRM and Land Registry
- Identification of consent defects and misrepresentations
- Management of warranty breaches and indemnification clauses
- Analysis of price adjustment clauses and inexcusable errors
Why Choose Us?
With deep expertise in managing legal risks and protecting assets, our team helps you secure your commercial transactions and minimize potential risks. We work with you to develop tailored strategies and ensure the success of your acquisition projects. Trust our firm to guide you through every step of the due diligence process and protect your long-term investments.
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