Your Closet, Your Skeletons: Common Pitfalls During The Due Diligence Phase When Buying Or Selling A Business

Mergers and acquisitions typically have extensive due diligence by the buyer. Tackling due diligence during an M&A transaction can be an overwhelming task, but essential for closing a successful, equitable and efficient deal. Before committing to the transaction, the acquirer will want to ensure that it knows what it is buying and what obligations it is assuming, litigation risks and intellectual property issues, liabilities, problematic contracts, and more.

Understand what buyers will be looking for, and what sellers need to have prepared for the due diligence process and the key information a company must uncover from their target before moving forward with a deal:

• Legal (intellectual property, compliance and regulatory matters, contracts, licensing, EH&S, etc.)
• Financial (including taxes, company’s financial statements & projections, working capital, etc.)
• Human Resources (HR) (outstanding stock options, retention plans, employee agreements, culture, bonus structures, benefits etc)