Legal due diligence is more than driving around in the car. It is a thorough investigation that involves lawyers and CPAs who examine documents and data. It involves a comprehensive review of many areas including a legal review which covers contracts, litigation liabilities and intellectual property as well as corporate records and regulatory compliance, an audit of financials, which includes accounting policies, financial statements and tax returns. It also involves an operational review of the business’s management, organizational structure, products, services, sales, marketing facilities and equipment supply chain, customer relationships sales and distribution channels, as well as competition.
Legal due diligence can be a time-consuming process, depending on nature of the business and the amount of money involved in the transaction. This is particularly the case for large businesses that have virtual piles information that lawyers must sort through. Many legal departments are making use of technology to streamline the process. For example a document review platform is integrated with AI tools.
Set up a framework for your investigation and a goal before you begin your legal due diligence. It is helpful to prepare a checklist of key areas to investigate and have the legal team work out the strategy of attack with the business owners. It is also important to prioritize which areas require special expertise from the firm. A legal due diligence review on an IP holding company, for example could include questions from an intellectual property specialist to determine whether the company has any important patents or other intellectual property rights and whether there are any infringement cases in the https://medicaldataroom.com/how-to-prepare-your-legal-documents-for-due-diligence/ process or imminent.