Legal Due Diligence

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Legal Due Diligence
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• Due Diligence widely defined as a broad synapsis
   of investigative procedures in relation to an
  acquisition /financing of a companys shares or 
  a joining joint venture project,. Jurisprudence
  of due diligence is closely associated with
  concept of notice which can be constructive, or
  implied. Legal due diligence is the process of
  collecting, understanding and assessing all the
  legal risks associated during Financing/MA
  process. During due diligence, the acquirer
  reviews all the documents pertaining to a target
  company and interviews people associated with it.
  Normally the team consists of senior legal
  professionals along with CA, Valuers and
  technical experts who should be independent,
  neutral, unbiased, and without foregone
  conclusions.

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• BENEFITS Firstly, it gives the acquirer a better
  opportunity to understand the target company and
  its operations before  acquisition. Also both
  investor and target companies legal counsels meet
  and coordinate the diligence process which
  affords an opportunity of both parties legal
  compliances and other transactions.

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• Secondly,
• the buyer can use the information obtained
  through legal due diligence to determine the
  right amount to pay for the transaction. It also
  gives a chance for the buyer to closely analyse
  the financial, structural and operational aspects
  of the business including Human capital and IPR
  assets.
• Thirdly,
• the information obtained during the legal due
  diligence process can help both the buyer and the
  target company to draft appropriate merger and
  acquisition documents and other documents. It
  also plays a role in negotiating the right value
  for both parties, based on the legal obligations
  of the target company.
• Fourthly where ironically it is said  knowledge
  is power due diligence ensures that there is no
  imbalance/inadequacy of knowledge. It also
  ascertains risk in any transaction one can
  negotiate terms.
• Finally it is a great opportunity for two
  corporates join together ended in single entity
  which will all the time benefits  investors  and
  stakeholders apart from improved brand image,
  reputation, goodwill and other value additions.

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• 3 Execution The Execution stage will have the
  due diligence team collecting the information,
  analysing and evaluating them, and finally
  sharing the results of their analysis or
  evaluation, as appropriate. Also certificates
  from various agencies shall be taken as a matter
  of record to substantiate the strengths of the
  target company. Some pitfalls and obstacles may
  occur due to non-availability of
  documents/information and the team should
  successfully encounter them with possible
  alternatives.The author is senior legal
  professional /arbitrator with exposure in
  corporate affairs/governance presently located at
  Danville CA USA.
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