M&A Due Diligence

With mergers and acquisitions, due diligence is a vital and demanding undertaking that requires considerable expertise. Before committing to the transaction, the buyer will want to ensure that it knows what it is buying and what obligations it is assuming, the nature and extent of the target company’s contingent liabilities, problematic contracts, litigation risks and intellectual property issues, and much more. This is particularly true in private company acquisitions, where the target company has not been subject to the scrutiny of the public markets, and where the buyer has little (if any) ability to obtain the information it requires from public sources.

Due diligence is usually performed after the intent to purchase documents have been signed but before the formal purchase agreement. Depending on the purchase, the some of the topics that are likely to be included in the process include the following:

  • General company information
Employee/Management Issues
  • Financial matters
  • Legal matters
  • Technology and intellectual property
  • Company IT
  • Products and services
  • Customers and sales
  • Marketing and competition information
  • Operations
  • Strategic fit with buyer
  • Material contracts
  • Tax matters
  • Antitrust and regulatory issues

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