Acquisitions, due diligence
We will help you with the whole process of the proposed transaction, whereby we will suggest an optimal way of the transaction on the basis of identified risks. The provision of contractual documentation including the sales process and namely also including „data room“ is a matter of course. At the same time we cooperate with entities that supplement our analysis with a financial, tax, accounting or technical analysis according to the wish of the client.
The term acquisition is of Latin origin and it denotes an increment, i.e. a newly acquired thing or person. In the usual legal and commercial practice, this term is used to control a business company, in particular by purchasing shares, stocks, acquiring voting rights, or it can be used also in relation to the acquisition of the ownership right to an immovable thing.
In relation to a company or a immovable thing, it usually concerns things of greater property value, in which or in connection with which a number of rights and obligations arose and arises, and such rights and obligations could also subsequently increase the prepared investment of financial means or decrease expected profit or even the performed acquisition could became invalid and therefore a situation could occur, where the investor has neither the company nor the immovable thing nor the invested financial means, therefore there is an increased need to ascertain and deal with potential risks connected with the prepared acquisition.
Therefore most entities acting with due and reasonable care and entering any more expensive transaction perform detailed review of things and legal relationships and other acts in order to obtain as much information as possible, which help them make a qualified decision, whether to perform the relevant transaction, which further also often reveal elements that can have and often also have an effect also on the price of the relevant transaction and last but not least which ascertain facts that must be dealt with in the contractual documentation.
The most frequent reviews that are carried out are legal, financial, accounting and tax or technical due diligences.
The legal due diligence is mostly divided into two basic due diligences, namely acquisition due diligence performed by the interested party and the due diligence ordered by partners or management (so called vendor due diligence). The legal due diligence focuses, as it results from its name, on questions connected with important legal facts related to the company, whereby it concerns especially the commencement of legal existence of the company, authorisation to transfer shares to other members/shareholders, i.e. ascertainment whether the member/shareholder, who transfers the share/stock, is the real owner, what property the company owns, whether the company does business properly, whether no disputes are pending against it, what obligations the company has, how these obligations are secured etc. The project due diligence is used to ascertain essential information and it deals with individual areas of examination, namely especially the corporate area, the area of ownership rights, obligation rights, further the labour-law related area, the area of intellectual property, the procedural area in relation to judicial, administrative and other proceedings.
The basis of such due diligence is in the form of acquired documents, namely from the company or from its owner and from publicly accessible records, registers, files and lists.
Another review is the financial due diligence. The financial due diligence focuses on verification of the state of finance and economic activities and further it includes the assessment of financial fitness as well as identification and evaluation of possible risks, which can affect the purchase price of the company and return on investments in this company or immovable property.
The tax due diligence focuses on analysis of tax declarations and financial reports especially in order to identify tax risks and possibilities of tax optimization of a possible transaction.
The accounting due diligence includes assessment and evaluation of accounting of the company especially in relation to accounting methods and procedures used, from which possible risks connected with accounting of the company or with the property of the company may result.
Within the scope of acquisitions we provide legal services also to the sellers in order to cooperate sufficiently with the buyer and to create optimal documentation, which does not pass unreasonable risks to the seller and which ensures that the buyer provides corresponding performance to the seller.
On the basis of cooperation with tax advisors and expert institutes, we are able to provide also other above-mentioned due diligences so that the client obtains the maximum amount of information for the execution of and dealing with the prepared transaction.