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 or business in the first place.
• Critical issues such as whether there are litigations, claims, disputes, and whether major licences are in place.

3. Agreement

Get robust representations and warranties from the seller in the sale and purchase agreement.

The above is not perfect. The buyer in such instance must understand that this legal due diligence is more limited than the scope typically conducted in acquisitions. Given the size, risks and objectives of the acquisition, the buyer should consider whether to proceed.

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This post first posted on LinkedIn on 3 September 2024.