Linkedin survey on challenges on identifying salient terms

Due Diligence

I remember my first legal due diligence.

I was roped in to assist my colleagues as the data room for the legal due diligence was about to close.

I was asked to get a laptop from the IT personnel and given an address to go to.

I met my colleagues there who were already deep in the due diligence exercise. We stayed past midnight on the last day.

In my novice eyes, almost everything seemed like salient terms.

Termination clause? Important!

Cross-default clause? Critical!

I would be interested to know what challenges you or you think you colleagues face when trying to identify salient terms of contracts in legal due diligence.

See results of the survey conducted in November 2021 above.

A few insights from the poll on the question above:

1. Practice makes perfect. It makes sense that you are more competent in your 10th legal due diligence exercise compared to your first one. Being able to see the ‘whole picture’ by working on corporate transactions from beginning till end would certainly help.

2. The curse of knowledge. What is obvious to experienced lawyers may be new to the persons delegated with the task of identifying salient terms of contracts. Senior lawyers should explain the transactions, what are the salient terms to look out for and why those terms are important in the context of the transactions.

If those are not explained to you, ask.

3. With more experience and industry knowledge, understanding contracts become easier.

I find that review of banking documents for legal due diligence takes longer than other types of contracts. There are usually various security documents for banking facilities. Some banking facilities may have been renewed, supplemented or amended multiple times over a long period of time. Some documents may be missing or inconsistent, which make it harder to put the pieces together.

Judging from my previous posts on salient terms, there seems to be a fair bit of interest among legal practitioners on salient terms of contracts.

Thank you to the 51 persons who voted. 😊




The above was from two Linkedin posts on 3 and 10 November 2021.

Linkedin Post
Five key steps for legal due diligence

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