Complementary area
Legal due diligence
Legal due diligence is a structured review of a company's legal position ahead of an acquisition or investment. The aim is not to describe everything, but to find what affects the price, the terms or the decision to proceed.
When is due diligence carried out?
- Before acquiring shares or a business.
- When an investor is to invest in a company.
- As the seller's preparation for a sale (vendor due diligence).
- Ahead of significant collaborations or financings.
What the review may cover
Corporate matters
Articles of association, share register, ownership structure, board minutes, share issues and shareholders' agreements.
Material contracts
Customer, supplier and collaboration agreements, with particular focus on change of control, exclusivity, liability and termination.
Employees and key people
Employment contracts, benefits, restrictive covenants and collective agreements.
Intellectual property
Ownership of trade marks, software and other assets the business depends on.
Disputes, permits and compliance
Pending or threatened disputes, regulatory permits and material compliance issues.
Real estate and premises
Leases and rights of use on which the business depends.
From finding to contract term
A useful report links each material finding to an action:
- Price
- The risk is quantifiable and should affect the purchase price.
- Specific indemnity
- The seller compensates the buyer if an identified risk materialises.
- Condition precedent
- The issue must be resolved before the deal closes, for example by obtaining a consent.
- Post-closing action
- Deficiencies the buyer can remedy but needs to plan for.
Questions and answers
How extensive does the review need to be?
It depends on the size of the deal, the sector and the timetable. We agree the scope with you and focus on material risks.
Does it include financial and tax review?
No, our review is legal. Financial and tax due diligence is normally carried out by accountants or specialist advisers, and we are happy to coordinate with them.
What is vendor due diligence?
A review commissioned by the seller before the sale. It makes it possible to remedy issues in advance and control how information is presented.
Related services
Mergers & Acquisitions
Sale and purchase of shares or businesses – from letter of intent to closing.
Buying a business
Review, negotiation and documentation when acquiring a company or business.
Business valuation
A basis for negotiation in sales, acquisitions and ownership changes.