Why Using a Legal Due Diligence Checklist May Not Protect You
When companies are considering acquisitions or entering into mergers with other organizations, conducting thorough due diligence on the transactions is critical. Due diligence should consider the target company’s liabilities, litigation risk, contractual obligations, etc. that cannot be uncovered by simply following a legal due diligence checklist. When done correctly, due diligence can help firms avoid unpleasant surprises after the deal has closed.
Uncovering The Legal Due Diligence Checklist
Legal due diligence checklists can be helpful in some circumstances for firms that regularly engage in due diligence. However, for firms that do not conduct transactional due diligence in the regular course of their business, a due diligence checklist will do little more than identify key documents or processes to be reviewed. Using a checklist may not be enough to uncover potential issues. This can be particularly true when the individuals responsible for conducting due diligence review tasks are not well-versed in the specific areas or documents being reviewed.
Simply gathering documents and checking off boxes saying that the documents have been reviewed can lead to a false sense of security. There is a risk that the reviewer didn’t fully understand what to look for, or perhaps more importantly, how the piece of information they reviewed related to other information captured in the course of conducting due diligence.
Due Diligence Support
Bringing on a legal services partner for transactional due diligence that regularly provides buy-side and sell-side due diligence support ensures that professionals are overseeing the due diligence process rather than just following a legal due diligence checklist. Using an outsourced solution can allow your company to leverage tools and processes, as well as gain access to reviewers who have the experience, deep knowledge, and expertise needed to synthesize and analyze information.
Baer Reed provides transactional due diligence and other legal support services to law firms and legal departments in a cost-effective manner. To learn more, visit us online or call (888) 433-1990 today.
- On May 26, 2017
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