Consulting Engineer (Due Diligence and Maintenance)

A legal investigation of the target of a planned merger or acquisition carried out by attorneys, i.e. “legal due diligence”, is a key component of due diligence research. Legal due diligence mainly focuses on analysing those risks and liabilities that cannot be identified through publicly available information, such as financial statements.

In legal due diligence related to an acquisition, for example, at least the following are examined: corporate legal documentation, the target company’s contracts, pending processes or threats of litigation, intellectual property rights, environmental issues, licences/permits, debts, contingent liabilities/receivables, and insurance. The law firm’s duties in a due diligence assignment include contract analysis, analysis of risks inherent in the transaction, and a thorough examination of any legal processes affecting the target company. A key part of the analysis is identification of the financial impact of risks.

In the due diligence process, all relevant materials are collected, inspected and analysed, and a report is written on this basis. The report will include all findings, conclusions and recommendations for action. In practice, the due diligence examination may affect the decision on whether to execute the merger or acquisition, the transaction price, the structure of the transaction, its terms and conditions, the guarantees and collateral required from the selling party, and the distribution of risks between the selling and buying parties.