DUE DILIGENCE FOR PRIVATE MERGERS AND ACQUISITIONS
David Kaplan, Esq., LL.M. Attorney At Law
Kaplan & Associates LLC is a boutique Corporate, Business, M&A, & Securities Law Firm located in Denver, Colorado.
What is Due Diligence?
Reasons for Due Diligence
In any significant merger or acquisition the buyer gathers information about what it is buying before making a commitment. Primarily, the buyer uses this information to decide whether the proposed transaction is a sound commercial investment. In an extreme case, a buyer may decide to abandon the transaction after performing due diligence, but more commonly, a buyer uses the information to negotiate contractual protections (such as indemnification) or to adjust the purchase price.
A due diligence inquiry should establish the following key information about the target business:
? Confirm that the seller has good title to the stock or assets of the target business.
? Investigate potential liabilities or risks.
? Confirm the value of the target business.
? Identify steps necessary to integrate the target business.
? Learn more about the operations of the target business.
? Identify any impediments to the transaction, such as third party consents, a required stockholder vote, or prohibitions on transfer.
? Determine whether any ancillary documents will be needed.
THIS PUBLICATION DOES NOT CONSTITUTE LEGAL ADVICE, BUT IS A GENERAL OUTLINE FOR DISCUSSION PURPOSES. THIS PUBLICATION WILL NOT BE REVISED PAST ITS PUBLICATION DATE THEREFORE ANY READER SHOULD CHECK THE STATUS OF THE LAW, AND CONTACT AN ATTORNEY WITH ANY QUESTIONS PRIOR TO ANY ACTION. THIS PUBLICATION ONLY PROVIDES A GENERAL OUTLINE OF FEDERAL LAW, COLORADO LAW, AND NEW YORK LAW WHERE SPECIFICALLY STATED. ATTORNEY ADVERTISING.