Legal Due Diligence

When buying a company or a share in a company, a new owner faces potential risks, as such company may have, prior to being sold, violated the law. As a consequence, a new owner may be brought to responsibility, which, over the long term, will drastically decrease such company’s value.

Legal Due Diligence is a procedure involving a legal inspection of a company that is normally carried out prior to purchasing.

As part of a Legal Due Diligence, lawyers normally check:

• corporate issues (how the company was created and how respective shares in the company were purchased);
• company’s basic value (real estate units, fixed assets, or titles to intellectual property);
• essential agreements/contracts or other assets whose non-compliance with laws may entail penalties or other losses.