Legal due diligence examines a company’s legal and corporate standing, while financial due diligence focuses on its financial performance, liquidity, and overall stability. Both processes are complementary and essential to a successful M&A transaction.
Legal due diligence
Legal due diligence involves a review of the company’s corporate documentation, commercial contracts, intellectual property rights, pending disputes, employment matters, and potential liabilities.
Its purpose is to identify legal risks that may affect the value or completion of the transaction.
Financial due diligence
Financial due diligence, in turn, evaluates the company’s financial statements, debt levels, profitability, and cash flow. It provides investors with a clear understanding of the company’s financial health, sustainability, and potential returns.
Why both are important
Both legal and financial due diligence are integral parts of the M&A process. Together, they provide a full risk assessment and allow investors or buyers to make informed decisions and negotiate the most favorable transaction terms.
Planning an acquisition, investor entry, or business sale? Contact our M&A Team – we’ll help you manage due diligence efficiently and ensure full legal and financial security for your transaction.