Questions and Answers on Due Diligence

Due diligence is everywhere. It’s part of the process that we use when we choose a place to live or an employer, or even where to eat on Saturday. A thorough home inspection prior to making a purchase or a financial company’s analysis of an investment opportunity or a university’s review of applicants are examples of conducting the proper research needed for a high-risk transaction. This research helps us to establish expectations and provide contingencies in case things don’t turn out as we expected.

Due diligence inquiries typically include a review of financial data such as profit margins, and itemized business costs. Inquiries about intellectual property assets, including copyrights, patents, and trademarks, are common. Knowing who owns IP rights and their protection can help identify legal risks for the buyer.

During the due diligence, buyers should examine the corporate structure of the seller and the details of ownership, competitor profiles and annual reports. They should also review the background of any legal disputes and currently pending lawsuits which could have an impact on the deal’s final outcome.

A virtual data room can be a wonderful method to ensure that the due diligence is conducted properly and securely. It allows for collaboration, review and exchange of confidential information. A VDR allows multiple parties to review documents and access them simultaneously thus reducing redundancies as well as increasing efficiency. It also reduces risk of misinterpretation or loss of important information.

Оставить комментарий