Legal due diligence goes beyond rolling the tires of the car. It is a thorough investigation that includes lawyers and CPAs who review documents and data. It involves a comprehensive review of many areas including a legal audit, which covers contracts, litigation liabilities and intellectual property as well as corporate records and regulatory compliance. It also includes a financial review which includes accounting policies, financial statements and tax returns. It also involves a thorough review of the organizational structure, management and the products, services marketing, sales facilities and equipment.
Legal due diligence can be a long-winded process, depending on the nature of the business and the amount of money involved in the transaction. This is especially applicable to large public companies that have virtual piles of information that lawyers must sort through. Many legal departments are making use of technology to speed up the process. For example, a document review platform is integrated with AI tools.
Set up a framework for the investigation and establish a target before you begin your legal due diligence. It is helpful to develop an outline of the key areas to be addressed and to ensure that the legal team has a consensus on a plan of action with the business owner. It is also crucial to decide which www.medicaldataroom.com/how-to-prepare-your-legal-documents-for-due-diligence/ areas need professional input from the company. For example legal due diligence review of an IP holding company may include inquiries from an intellectual property specialist to determine if the company has any significant patents or other intellectual property rights and whether there are any infringement lawsuits in the process or being considered.