Due Diligence in Acquisitions

There are many reasons why thorough due diligence is indispensable to a successful corporate acquisition. Perhaps most importantly, it is a critical step in ensuring that they buyer has a comprehensive picture of what is being acquired. Both legal and financial interests are placed at risk in any business transaction. If thorough due diligence is not performed, a corporation can incur legal liability to its shareholders for losses sustained in the negligent acquisition. It can also lose significant assets, or waste valuable time and money on litigating the failed transaction. An experienced mergers and acquisitions attorney can protect your business by ensuring that all aspects of your due diligence investigation are conducted accurately, thoroughly, and with a broad-reaching projection for all potential contingencies. While it is not a legal requirement for the due diligence process, hiring an experienced Mountain View mergers and acquisitions attorney it is the best way to ensure that your investigations are thoroughly completed and can also protect a corporation from shareholder claims that its due diligence was incomplete or inadequate.

Due Diligence: The Basics

In general, due diligence is the process by which a buyer or seller performs a comprehensive appraisal of a business asset before executing a sales transaction. On the buyer’s end, this thorough investigation will examine the assets and liabilities of the assets to be purchased, as well as forming a picture of their commercial potential. For the seller, a due diligence investigation will focus on the buyer itself. It is vital for the seller to know whether the buyer has the financial means to consummate the deal. If the transaction will give the buyer any rights to management or control of the seller’s business, it is also important for the seller to learn about those processes, and how the seller’s business operations might be affected by the buyer’s exercise of those rights.

An effective due diligence process will do more than simply protect a corporation from liability to its shareholders. It will identify problems before they cost either business money, time, or goodwill. It will prevent depreciation or transfer of valuable assets in situations where it is not fiscally prudent. It will prevent contract disputes, arbitration, business litigation, and a host of other processes that have the potential to seriously impair daily business operations.

The Right Choice for Your Due Diligence Needs

The skilled mergers and acquisitions attorneys at the Structure Law Group have extensive experience in conducting thorough due diligence investigations which offer businesses comprehensive protection from bad investments. Call (408) 441-7500 or email slgadmin@structurelaw.com to schedule your consultation. Our friendly, professional staff will ensure that you meet with an experienced Mountain View mergers and acquisition attorney as soon as possible.