Preparing for due diligence
Whether a company is seeking private financing, participating in an acquisition or undertaking a public offering process, the other parties to the transaction will conduct a investigation of the company in varying degrees. Due diligence is the process of independently identifying and verifying information that either must be disclosed in offering or acquisition documents or is otherwise relevant to an understanding of the company’s business.
Organization and advance work to remediate known problems before formal due diligence commences are the key elements to ensuring a smooth
Next, documents need to be gathered, organized and made available to the other parties, often through an online “virtual” data room. Company counsel can provide a good indication of what types of documents companies should have ready for the particular type of due diligence process. By keeping at hand in advance key documents that are likely to be relevant in any process, such as organizational documents, material contracts, intellectual property materials and regulatory compliance documents, the amount of work and distraction inherent in the
Advanced corporate housekeeping can facilitate the due diligence process. Problems that are unearthed early on can be remediated (or a plan for remediation put into place) in advance of the commencement of the process. Ideally, a company should never be surprised by its own responses to
The due diligence process is intrusive, time-consuming and tiresome, but can also be instructive and useful. As the other transaction participants inquire into the company’s business, finances, contracts,