Legal documents for due diligence are documents that pertain to a company’s assets, business operations, and potential liabilities. This review is typically performed before a merger, acquisition, or any other business transaction and is essential in determining the value of the business. This review can help identify the potential risks by reviewing contracts or agreements, as well as any restrictions or encumbrances placed on assets.

Lawyers will also examine financial data, including federal and state tax returns, bank accounts and credit reports as well as physical assets. They will also look at the company’s payroll, employee benefits, contracts and organizational structure. Legal due diligence is a process that can take between 30 and 60 days. In more complex deals the duration can increase significantly.

Attorneys will also examine regulatory issues, including any issues with compliance and antitrust analysis(opens in new tab). They can also examine the legal framework of the company, including any litigation involving the company’s officers or employees.

The most important aspect of an investigation into legal due diligence is assessing the potential liability for a transaction. Attorneys typically recommend you purchase representations and warranties insurance (opens in a new https://medicaldataroom.com/how-to-prepare-your-legal-documents-for-due-diligence/ tab) for the purchase. This is essential, particularly in the event that the buyer isn’t familiar with the background of the company in question. It could protect the seller from inaccurate representations or claims made by the buyer. Last but not least lawyers can look over any documents related to employee policies of the company such as golden parachutes and severance packages(opens in the new tab) that could be affected by changes in ownership.