Legal Due Diligence
Legal Due diligence is usually the preliminary step taken by an investor intending to enter into an asset or share sale transaction, M&A, partnership, etc. The purpose of a legal due diligence is to assess the potential risks of a transaction by investigating the obligations and liabilities of the target company. This provides objective and reliable information to a potential purchaser as to whether to proceed with the transaction, exclude or limit the risks, and negotiate warranties or the purchase price. The document provides a straight-forward, customizable form of legal due diligence and covers the investigation of areas such as: share capital and shareholders, corporate structure, compliance with law, licenses and litigation, intellectual property rights, contracts of the company, taxation, properties, etc. Additional areas should be added as necessary depending of the nature of the due diligence in question. A due diligence should also provide a framework to enable understanding of the jurisdiction in which the target company is operating. Model of Legal Due Diligence.