Legal documents for due diligence are required when conducting any business transaction that involves the acquisition of equity or stakes in other companies, acquiring properties, investments or insurance and investment funds, or conducting company mergers. A thorough due diligence review can identify any risks and liabilities that could be a risk and devise strategies to minimize them.
It will also look at legal documents such as articles of incorporation and shareholder agreements, bylaws capitalization tables as well as governance and management structures and board and shareholder meetings minutes. It will review intellectual property assets, like trademarks or patents, as well copyrights to confirm ownership, registration status, as well as investigate the compliance with applicable laws, such as the laws governing health, environment and regulatory issues. It will also look at financial information, such as tax returns filed, balance sheet the profit and loss statement and cash flow report.
Due diligence in international law presents unique challenges. Different laws and requirements for information as well as document names conventions and translation requirements can all impede the due diligence process.
It’s unlikely that all companies that are being considered for acquisition will have a completely clean slate in terms of their legal background. Therefore, it’s vital to focus on the key issues. Identifying the red line issues that can cause a deal-breaker helps lower risk and cost and is vital to an effective transaction. Bloomberg Law Contract Solutions provides legal teams with a variety of tools to help streamline the contractual due-diligence process by providing online document retrieval and collaboration tools. Learn more about how to make your contract workflow more efficient here.
