Cookie PolicyWe use cookies to enhance your experience while using our website. We will take your continued use of our website as consent to our use of cookies.

 

      

501581-Legal-500-2017-HP-banner-1982px-HR.jpg

corporate banner

Due Diligence

Due diligence is the process by which a buyer gathers information about a business which it is interested in acquiring.


The process enables the buyer to establish as full a picture of the target business as possible. This will help the buyer to identify any risks associated to the business and also enable it to understand the business better.

A buyer may wish to carry out due diligence on a range of areas including legal, financial, tax, insurance and environmental due diligence. The nature of the business and the transaction will often dictate the most appropriate areas which a buyer should consider carrying out due diligence on.

It should be noted that because of the greater risk assumed by a buyer in a share purchase (click here to see article "Share v. Asset Sale"), the amount of due diligence on a share sale can often be greater than that required for a business and asset sale (where due diligence is only required on the assets and parts of the business which are actually transferring).

The due diligence process is usually carried out as early as possible to ensure that the transaction is, from the buyer's point of view, a viable one.

In terms of the legal due diligence, the buyer's solicitors will usually submit a due diligence questionnaire to the seller's solicitors for their review. This questionnaire should, wherever possible, be tailored to suit the business being acquired and where a buyer has particular concerns or questions in relation to the business then those should be included within the questionnaire.

Upon receipt, the seller's solicitors will normally assist the seller in collating responses to the questions in an ordered manner. Once collated, the information can be passed on to the buyer's solicitors for their review with the buyer. Normally information is not passed on until the buyer has agreed to keep the information confidential.

The due diligence process may identify particular issues with the target business which the buyer needs to be protected against. The methods by which a buyer can be protected are the inclusion of specific additional warranties (click here to see article "Warranties") within the sale and purchase agreement, the inclusion of a specific indemnity within the agreement against a specific potential liability, an adjustment to the price offered for the business or, in the worst case, advice that the buyer should not proceed with the transaction as the risks are too great.

We can assist a buyer to prepare, organise and undertake an appropriate legal due diligence process. We can also recommend third parties to carry out other specific types of due diligence including in relation to financial and tax aspects.

We can also assist sellers in responding to legal due diligence questionnaires.

For further information in relation to this article, please contact Daniel McCormack.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

Get in Touch

With Lupton Fawcett on your side, you're taking control. Contact us today.

Enquiry Form

Please complete this form to make an enquiry and we will get back to you as soon as we can.

Remember you can still call us on 0333 323 5292 or email us at corporate@luptonfawcett.law

 Yes
 No

Testimonials

  • I have known Dan for a number of years and he has been a valuable source of commercial advice across a wide range of issues.

    Lupton Fawcett Logo
    Lupton Fawcett Logo
    Dirk Mischendahl, Ross and Cashmore Limited; Leeds Ice Cream Company Limited

    Having Giles Clegg acting for us at director level, with this wealth of experience, meant that we were constantly several steps ahead of the other advisers.

    Lupton Fawcett Logo
    Lupton Fawcett Logo
    Henry Robinson
  • Jonathan Oxley is an invaluable sounding board with a can-do attitude.

    Lupton Fawcett Logo
    Lupton Fawcett Logo
    Chambers and Partners

    Andrew and his colleagues at Lupton Fawcett were accessible and they provided us with excellent advice throughout the cross-border transaction. We would recommend the services of Andrew and his team to others.



    Lupton Fawcett Logo
    Lupton Fawcett Logo
    Andrea Pappagallo, Vice President, Federal-Mogul Inc
  • Andrew's involvement in the negotiations helped us secure a very beneficial outcome for both Empowering Wind MFC Limited and Middlesbrough FC.

    Lupton Fawcett Logo
    Lupton Fawcett Logo
    Paul Millinder, Managing Director, Empowering Wind MFC Limited

    Max is an excellent lawyer who knows my businesses inside out and always deal with my requirements promptly, efficiently and I can always rely on him to just 'sort it out' for me.

    Lupton Fawcett Logo
    Lupton Fawcett Logo
    John Hill, Hill Care Group
  • Martin provided not only spot on and instant legal advice, but he also came with a masterful and passionate negotiation technique - I'm glad he was on our side!

    Lupton Fawcett Logo
    Lupton Fawcett Logo
    Richard Hunt, CEO, Agility Multichannel Limited

    Giles and his team were invaluable to us, showing outstanding attention to detail coupled with a commercial and pragmatic approach where necessary.

    Lupton Fawcett Logo
    Lupton Fawcett Logo
    Peter Watson, Managing Partner, Simpson Millar