Legal due diligence is more than rolling the tires of a car. It is a thorough investigation using lawyers and CPAs to verify documents and the facts. It requires the analysis of a range of focus areas, including a legal review of material contracts litigious liabilities, intellectual property, regulatory compliance and corporate records review of accounting policies and financial statements and tax returns. It also involves an operational review of the business’s management, organizational structure, sales, products, marketing facilities and equipment supply chain, customer relations as well as distribution and sales channels, as well as competition.

Based on the size of the deal as well as the how complex the company is, the legal due diligence process can be extremely long-winded, especially with large public companies with massive piles of information that lawyers must sort through. As a result, many legal departments are beginning to make use www.medicaldataroom.com/how-to-prepare-your-legal-documents-for-due-diligence/ of technology to streamline and expedite the process, like a document review platform which integrates with AI tools.

Before starting the legal due diligence process, you must establish the structure and goals for the investigation. It is beneficial to make an agenda of key areas that need to be addressed and to have the legal team agree on a strategy with the business owner. Prioritizing which areas need experts’ assistance is crucial. A due diligence review of legality on an IP holding company, for example might include questions from an expert in intellectual property to determine if the firm is the owner of any important patents or other intellectual property rights and whether there are any infringement cases currently pending or imminent.