What does a corporate transactional lawyer do while waiting in the lift, at a restaurant counter or for coffee at a café? I read the licenses on display, check their validity periods, and scan for conditions. When I see certificates on the walls, I can’t help but examine them too. …

I usually get a bit concerned when potential buyers say they do not require legal due diligence on the target company or business. This is usually because they believe they already know the business or due to budget constraints. Unless the buyers are already involved in the management of the …

In my previous post, I proposed alternatives for buyers facing budget constraints in conducting legal due diligence, including obtaining robust representations and warranties from sellers in sale and purchase agreements. However, buyers should note that contractual protection is not a substitute for legal due diligence for the following reasons: The …

When a buyer wants to acquire a company or business but has a limited budget for legal due diligence: 1. Searches Conduct all standard public searches. 2. Targeted due diligence Focus legal due diligence on: Key areas important to the buyer, i.e. why the buyer wants to acquire the company …

During legal due diligence for a corporate exercise, review the resolutions and minutes books of a target company for the following: Were shares properly issued with shareholders’ approval? Did the company circulate its annual financial statements to shareholders? Have the directors approved any unusual dividends? Where a director is interested …

When I started out as a corporate lawyer, the most difficult part of legal due diligence was not the voluminous review of documents and preparation of reports. Some clients or instructing counsels prefer a summary of legal issues with a significance rating for each issue in legal due diligence reports. …

I think it’s the ability to spot inconsistencies in the information provided and ask follow up questions. Here are a few examples: 1. The Phantom Employees The target company’s representatives claimed that there were no employees in a seemingly dormant company. Yet, its audited accounts showed salaries and wages being …

Here’s how I conduct legal due diligence. Before diving into drafting the sale and purchase agreement for an M&A transaction, it makes sense to first understand the business of the target company and the regulatory framework in which it operates. Consider the following: 1. Business Activities What are the principal …

Part of due diligence skills lies in organising documents in a way that allows you to connect the dots. If a legal due diligence exercise spans more than a few months, it’s essential to have a system for tracking the documents you have reviewed. It can be frustrating when the …

“Am I too optimistic or is the other adviser too pessimistic?” I wondered after concluding a call with an adviser who had ranted about due diligence issues. Due diligence can indeed be frustrating for all parties involved. For the management of the target company tasked with responding to due diligence …