Where there are mergers and acquisitions, you are likely to find lawyers doing due diligence work on behalf of the clientele. But if you are like many people, you may be wondering what is the diligence work involved. We did a little research and discovered there are certain due diligence areas that only lawyers can perform.
The first will be the report on legal documents. By legal documents, we mean documents that make the marked company a legal entity. If its a corporation, it could be the articles of incorporation and in case its a limited liability company, it might be the LLC documents. Due to legal jargon found in these documents, only lawyers with corporate law experience would understand how to decipher them.
For corporations, other legal documents that must be reviewed in research include good standing certificate, company bylaws, the minutes of shareholder and board of director meetings, and outstanding warrants and option agreements.
If the target company is an LLC, other documents that really must be checked within the name of homework are definitely the articles of organization, the companys good standing certificate, operating agreement, the minutes of membership meetings, manager agreement, and outstanding purchase rights and option agreements.
The next area of concern in research that lawyers tackle are definitely the different agreements entered with various third-parties. Legal agreements include all major contracts with distributors, suppliers, and customers, as well as confidentiality and non-compete agreements, intellectual property agreements, and equipment leases. Other agreements that should be reviewed are insurance coverage and property agreements.
The 3rd area that corporate lawyers do in due diligence is a review of license and permits. The concept here is to find out whether the objective clients are in compliance with all the different state and local laws.
Other areas that happen to be of special concern in due diligence work add the selection of all major assets and liabilities, UCC liens, and customer problems.
Areas we mentioned previously would be the legal regions of concern that are tackled during research work. There exists another area that is reviewed simultaneously as the legal papers which is the financial standing of your target company.
During research work, federal and tax statements are reviewed. But this is not really the only part that may be reviewed. Also reviewed are definitely the financial statements and tax liens.
Again when you are about to enter into a merger or acquisition deal, you must enlist the assistance of an organization lawyer that has experience in the areas we mentioned above. Exactly what the lawyers do is take a look at every one of the relevant documents to ascertain the overall wellness from the company as well as its financial standing.
Research must not be overlooked as it can assist the acquiring company avoid problems later on. If you want assist in finding a business lawyer, it is possible to visit websites like Lawyers.com that come with peer-reviewed and client-reviewed law offices.