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Jan 23 2020 0

Due Diligence in California Mergers and Acquisitions

Selling your company is often an overwhelming time for everyone involved. An acquisition could usher in a brand new era of growth for your business. An inadequately drafted acquisition agreement, however, could also endanger the financial and legal affairs of any business owners who fail to appropriately plan for this type of event.

What Matters Need to Be Examined During Due Diligence?

Due Diligence in California Mergers and Acquisitions

Every company is different, and every acquisition and/or merger demands that a multitude of crucial issues be reviewed by both sellers and buyers alike. Listed below are a few, of course not all, of the points of concern that need to be examined:

Financial Affairs

Reviewing a business’s financial situation is considerably more complicated than a basic review of its liabilities and assets. Adequate financial due diligence has to establish the authenticity of the figures included in a business’s financial statements and the premises on which the business’s economic projections depend. Furthermore, if the target company has not been audited by a third party accountant before, the due diligence phase is absolutely the time to conduct one. 

Legal Due Diligence

Even though the majority of company owners start off by focusing on the fiscal condition of a business, legal due diligence is an essential part of any acquisition or merger.  If you are purchasing a business, throughout the due diligence process, your California business attorney will critique the target business’s arrangements with their vendors, their customers, their employees, and any others that are necessary in order to distinguish any vulnerabilities and restrictions. This is designed to safeguard the buyer’s affairs and to produce the anticipated shift once the sale is completed.  

Intellectual Property and Technology

For the majority of technology firms, their intellectual property is their most important asset. Typically, a business’s IP is the single reason it is being analyzed for an acquisition. The process of due diligence has to make certain that, among other things, a business’s estimable IP truly applies to the business in question. It has to be clear of any legal cases, like patent violations or copyright infringement. Furthermore, getting open-source software incorporated into a business’s IP can oftentimes affect the possession rights of the IP that the business itself built. 

Legal Liabilities, Commitments, and Contracts

A target business might have a multitude of liabilities. A business’s economic liabilities make up just a tiny subset of the liabilities that need to be analyzed. Agreements with customers, vendors, owners, employees, business partners, lenders, and others are able to produce legal liabilities that eventually becomes the purchaser’s responsibility once the sale has been finalized. 

Without individual guidance and a dependable transaction agreement, you could be vulnerable to liabilities and losses after selling or purchasing a business.  If you are thinking about purchasing or selling your company, having an experienced attorney from Leiva Law Firm is an excellent way to protect your interests.

Our business and civil attorneys can go over the details with you in a free case evaluation.

Schedule a free, no-obligation consultation today by contacting us at (818) 703-1777 as soon as possible. Our attorneys speak both English and Spanish.

 

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