Due diligence

A buyer sees a business from the outside: its accounts, its customers, the story the seller tells. What sits underneath — a contract the main customer can end when the owner changes, a lease in someone else’s name, a claim not yet filed — only appears when someone goes looking. Found early, such a point is a question for the price or the contract. Found after closing, it is usually the buyer’s problem alone.

Legal due diligence is an organised way of looking. A buyer can run it, or a seller can commission it before a sale to prepare the ground and avoid surprises at the negotiating table. It reaches well beyond reading contracts:

• the rules on confidentiality undertakings, and on the use a bidder may make of what it learns;
• the rules on sharing sensitive information with a bidder that is also a competitor;
• the rules on handling personal data about staff and customers in a data room;
• the rules on proving title to the shares, to the assets and to the intellectual property the business depends on;
• the rules on change-of-control clauses that allow a counterparty to end a key contract;
• the rules on permits and licences, and on whether they survive the transaction;
• the rules on hidden liabilities — pending claims, employment matters and environmental exposure;
• the rules on who may rely on the findings, and on the responsibility of those who report them.

Our lawyers can support you with this.