Crest Legal Solicitors
86-90 Paul Street

London EC2A 4NE

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Crest Legal is the trading name for Crest Legal Limited. Crest Legal Limited is registered in England and Wales with company number 11078493, with its registered office at 86-90 Paul Street, London EC2A 4NE. Crest Legal Limited is a firm of solicitors which is authorised and regulated by the Solicitors Regulation Authority with SRA number 645425. 

 

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Due diligence for company acquisitions

1.2.2019

What is due diligence?

 

Due diligence is a formal process by which a buyer of the company investigates the business. The process is designed to provide the buyer with information to support the valuation of the business and to bring out any key issues. You should involve us as experienced commercial solicitors so that the process can start off in an optimal fashion.

 

How will due diligence proceed?

 

Generally the buyer will produce a questionnaire and a document request list, which has been prepared in conjunction with the law firm and accountants advising the buyer. Any bank and third party investor financing the transaction are also likely to have added to the questionnaire and the document request list, with matters that they would want investigating.

 

How should you prepare for due diligence? 

 

Members of senior management should be available to consider and answer the questions. Documents can be filed into a secure cloud data site. We, as your lawyers, can set one up for you. The main advantage of a data site is that all the documents are safely kept in one place.

 

Which areas will due diligence cover?

 

The exact areas will vary depending on the type of business, but there will generally be questions and requests relating to the following:

 

1. Company information

 

This will cover the company structure and a list of the shareholders, option holders and directors of the company.

 

2. Business and its assets

 

This will cover the business plan, key assets of the company and copies of your material contracts with your customers and suppliers.

 

3. Real estate

 

This will cover any properties that are owned, leased or occupied by the business.

 

4. Finance/tax and VAT

 

The buyer will want to assess the financial status of your company and ensure all tax liabilities have been met. This will include any borrowings and information on all tax payments and VAT returns.

 

5. Intellectual property

 

You will be asked to provide a list of any material intellectual property owned or used by the company.

 

6. Information technology

 

You will be asked to provide particulars of any software or equipment that you use.

 

7. Human resources

 

Information on remuneration and length of service of directors and employees and directors, together with their employment terms.

 

8. Pension plans

 

The list will generally request details of any pension schemes that your company is involved with.

 

9. Litigation

 

A standard request will be to provide details of any litigation or similar dispute/proceedings that the company is involved with or that are contemplated.

 

10. Data protection

 

Many companies hold customer data, collected in a number of different ways. You will usually be asked for details on how that data is stored and safeguarded, and how the company complies with data protection laws.

 

11. Regulatory

 

In any regulated industry, you will be asked to provide details of any regulatory consents that your company holds.

 

12. Health and safety

 

You may be asked for details of any health and safety policies that you have in place.

 

13. Insurance

 

This will request details of all insurance policies held by the company and details of any recent or on-going claims made on them.

 

We can help, please call 020 3871 8442 or complete a free online enquiry
 
Our solicitors will be pleased to meet with you at your business premises or at our offices.
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