Corporate Law

Due diligence means deep research of a firm or corporate body undertaken prior to its merger, acquisition, or investment in it. Essentially, the attempt is to find out the risk or liability that may be involved in the transaction and the general financial and functional condition of a company.

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Due diligence always covers very extensive research of financial accounts, tax returns, legal documents, intellectual property, and everything else by way of information.   This might also include interviewing key employees, site visits, amongst other investigatory techniques.

 

The extent and intensity of due diligence can also vary depending on the nature and type of transaction and investment and the parties to the transaction. The due diligence to be performed on the purchase of a small business, for example, would be much less complex than for that of a multinational organization.

 

Due diligence cannot be overemphasized, as it would reveal certain contingent liabilities, legal or financial in nature, whose occurrence has serious repercussions, and organisms and investors who may be considering transactions or investments should seek legal and financial expert advice to help the due diligence processes be as thorough and as effective as they should be.