Due Diligence - Shonee Kapoor

Legal due diligence is a broad form of investigation into a business that includes a thorough or deep reviewing of documents and also interviewing employees of the company or business entity. A legal due diligence is said to be completed when an investor or business is interested in acquisition of a business or making investment in the business.

The whole process of legal due diligence is performed to seek information about the business in order to understand the growth and profit possibility in that business. The investigation team seeks all the important facts, and figures to know the current financial status as well as potential liabilities and profit. Once, all the data and facts related to the business are collected, organized and analyzed, one can take a calculated decision depending upon the deep analysis of facts and statistics of the business.

Legal due diligence can be further subcategorized into three parts that are;

• Intellectual property due diligence
• Business due diligence
• Accounting due diligence

Due diligence is mainly performed for preparing for a merger, licensing, acquisition or investment or other transaction in a business.

Due diligence is performed to understand almost all of obligations related to the specific business that you want to acquire or invest in. Those obligations include;

• Debts
• Leases
• Pending & Potential Lawsuits
• Long-term agreements
• Contracts
• Agreements
• Compensation and so on.

Based on the analysis of these aspects of a business, an informed business decision is made; either to go into a contract, acquire or invest in the business.

Due Diligence FAQs (Frequently Asked Questions)