Due Diligence is the process of investigating the target company from a legal, operational, financial and tax perspective in order to identify risks and issues regarded as significant from a legal viewpoint and considering potential solutions.
There is no legal obligation to conduct a due diligence investigation before acquiring assets or shares in a company. It is nevertheless advisable practice for making well-informed decisions and avoiding exposure to unknown post-acquisition liabilities.
Depending on the type of company and nature of its operations, a due diligence questionnaire is prepared by the purchaser’s legal counsel in order to collect the documents and information required in connection with the contemplated transaction.
The due diligence questionnaire covers a broad range of legal matters including organisational and corporate documents, contractual and financial arrangements, real property and fixed assets, employees and benefits, legal compliance, litigation, intellectual property, environmental as well as other important regulatory and business issues.
In formulating the due diligence questions, legal counsel considers the specific areas of interest for the purchaser and exercises discretion in deciding what is likely to be materially relevant.
Legal due diligence also investigates whether the target company or business complies with applicable laws and regulations. This is particularly important in highly regulated industries where non-compliance can result in significant operational and reputational risk. In Greece the regulatory framework is often complicated comprising of main and secondary legislation, where primary legislation establishes the broad principles and secondary legislation provides detailed rules for implementation.
At Calypsis we are experienced in investigating companies and preparing legal due diligence reports which identify key issues and summarise recommendations. We assist our clients familiarise themselves with the legal and regulatory risks from a practical perspective and, where they decide to proceed with the acquisition, assist them in negotiating specific terms in the agreements to be executed in the course of the transaction that best safeguard their interests.
This insight has been prepared for general information purposes of our clients and other interested persons and is not intended to constitute legal advice.
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