A legal due diligence review is more than just the legal equivalent of hitting the tires of the car. It is a thorough investigation that involves lawyers and CPAs who verify documents and other facts. It involves a review of several areas, including a legal audit, which includes contracts, litigation liabilities and intellectual property and corporate records and compliance with regulatory requirements, a financial review, which includes financial statements, accounting policies and tax returns. It also involves a review of the organizational structure, management and the products, services, marketing, sales, facilities and equipment.

Based on the amount of the deal and complexity of the business as well as the complexity of the business, the legal due diligence process can be very time consuming, particularly with large public companies which have virtual piles of documents for lawyers to sort through. Many legal departments are now using technology to streamline the process. For example an online platform for document review is integrated with AI tools.

Establish a framework for the investigation and define a goal before you begin your legal due diligence. It is beneficial Clicking Here to make an agenda of key areas that must be covered and to have the legal team agree on a strategy with the business owner. It is also important to determine which areas require specialist input from the firm. For example, a legal due diligence review of an IP holding company might include questions from an intellectual properties specialist to determine whether the company is in possession of any significant patents or other intellectual property rights, and whether there are any infringement actions that are pending or threatened.