Successful company acquisition: no surprises.
The secrets of successful company acquisition are disclosed through Legal Due Diligence, which helps to convert the buyer’s anxieties and doubts into advantages. In our experience, clients frequently fear uncovering “skeletons in the closet” when purchasing a business. As a result, we offer a transparent acquiring and selling process with minimum risks, which has already resulted in the successful completion of numerous transactions.
During the Legal Due Diligence, we study several areas of the company being acquired. So, what risks do we face?
When analyzing the registration data, owners, the history of structural changes, the capital formation process, and the lack of encumbrances, errors in the documents relating to the previous change in the ownership structure were discovered. Despite this, the transaction went through, although the seller was required to correct the detected errors.
When we check licenses, permits, policies, and other company documentation for compliance with various requirements, such as GDPR, AML, and customer protection, we occasionally discover that the selling company operates outside of its authority, violates GDPR severely, or does not meet sufficient AML requirements. In one case, this resulted in a decrease in the company’s price and the correction of violations; in another, violations were addressed prior to the actual sale. Furthermore, when reviewing the company’s internal policies, website policies, and apps, we frequently discover violations and non-compliance with regulations, which we then address with appropriate recommendations.
Analyzing the results of company checks by regulators (including licensing bodies, AML structures, tax services, funds), as well as legal disputes, we often find fines and decisions that affect the operations of companies. It is important to note that each regulatory investigation ends with a specific decision.
When studying issues related to the ownership of assets, trademarks, and other intellectual property, there have been several instances where these rights actually belonged to third parties, not the company selling them, which contradicted the seller’s statements.
In reviewing financing agreements (for example, loans, investments, token sales), we actively communicate with creditors and determine the status of contractual obligations, which is extremely important.
While researching the statuses of tokens issued by the company and assessing the risks of their classification as securities, electronic money, or financial instruments, we have encountered violations that could potentially affect the outcome of a deal.
In the process of reviewing contracts with company partners, risks related to complexities in relationships with partners are identified, and vulnerabilities in these contracts are pinpointed.
We regularly assist the buyer in identifying risks, which also affects the decision to purchase a specific company. If the risks are deemed acceptable, we suggest designing and incorporating into the share purchase agreement such terms that must be met before the deal is finalized, known as “conditions precedent.” We also help monitor their fulfillment. Moreover, the results of the Legal Due Diligence can influence the deal’s price and other terms, including warranties, payment terms, and so forth. Thus, our role is not only to identify risks but to develop effective strategies for their mitigation.
Therefore, all deal terms depend on how efficiently the Legal Due Diligence is conducted. Throughout our work, we have helped identify numerous risks, designed solutions, and shaped deal terms, all while ensuring maximum protection of the buyer’s interests. It’s a powerful tool that allows us to transform our clients’ concerns into advantages and ensure successful deal completions when purchasing companies. Thanks to this, our clients trust us and confidently continue to buy new companies, relying on our support.