Legal Due Diligence for Businesses
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Legal Due Diligence is becoming increasingly popular in business landscape today. This is unsurprising, given the importance of having a comprehensive understanding of an investment before making a commitment. It is not always possible to conduct a complete assessment of a large business or a real estate asset by the efforts of in-house staff. This is where consulting firms come in.
When Do You Need Due Diligence?
Due Diligence may be required as part of the company’s preparations for a range of transactions, including:
- mergers and acquisitions;
- acquisition of real estate;
- introducing a new partner into the business;
- providing a loan;
- buying and selling shares;
- targeted investment.
What Does Legal Due Diligence Involve?
A single legal consultation is not enough for a comprehensive legal assessment of an investment object. On average, the evaluation takes from 2 weeks to 12 months, depending on the size and specifics of the business. The following are some of the key areas that are typically covered during legal Due Diligence:
- the legality of all title documents, ranging from the company’s constituent documents to documentation on its held assets;
- the legality of the company’s management structure;
- the identification of any encumbrances affecting the company’s real estate holdings;
- the company’s obligations to partners (contracts with counterparties and loan agreements);
- examination of pre-trial and court proceedings involving the company;
- evaluating the risks of the existing management system and its effectiveness.
At the end of the Due Diligence process, the investor will have a detailed report in hand that contains information about the investment target, including its prospects. These insights can have a direct impact on the size of the investment and whether or not the investor decides to invest in the project.
Investments are a matter that should be approached with all seriousness. The results of legal Due Diligence help stakeholders make informed decisions based on objective and accurate information about the subject of the study. Entrust Due Diligence to BULR specialists.