Due diligence documents are required for any business transaction that involves acquiring stakes or equity in a company, purchasing property or investment funds, insurance or acquiring investments. A thorough due diligence audit will identify any potential risks or liabilities and create strategies to limit the risk.
It will also look at documents such as articles and bylaws of incorporation, shareholder’s agreements and capitalization tables. It will also look at the governance and management structures as well as the minutes of the board and shareholder meetings. It will review intellectual property assets, including trademarks or patents, as well copyrights to verify ownership, registration status, and investigate the compliance with applicable laws, including health, environmental and regulatory issues. It will also review financial data, including tax returns and filings, balance sheets, profit and loss statement, and cash flow statement.
Due diligence in international law presents unique challenges. Different laws and information requirements, document naming conventions for documents and requirements for translation can all impede the process.
It’s unlikely that the majority of companies that are being considered for acquisition will have a clear slate when it comes to their legal background. Therefore, it’s important to concentrate on the most important issues. Finding the red line issues that will cause trouble can help lower risk and cost, and is essential to the success of a transaction. Bloomberg Law Contract Solutions provides legal teams with a range of tools that streamline the contractual due-diligence process by providing online document retrieval and collaboration tools. Find out how you can improve your contract workflow.