When purchasing an asset, it is essential to create an asset purchase due diligence checklist. The checklist should focus on legal due diligence undertaken in connection with an asset purchase and is separate to any financial or business due diligence that should be undertaken. As the name suggests, the checklist is a series of questions that are put to the seller and is usually referred to as a due diligence questionnaire or memorandum of information requirements. The key to successful due diligence is a proper analysis of the responses to these questions and taking whatever appropriate action is required.
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For a free initial discussion on how we can help when you are purchasing an asset, get in touch with us today. We will review your situation and discuss the process involved in a clear and approachable manner. Early expert legal assistance can help you avoid making mistakes, saving you money and also avoiding the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or complete our online enquiry form and a member of the team will get back to you.
What Should Be Included On An Asset Purchase Due Diligence Checklist?
Financial Information: The financial health and stability of the company selling the asset you are intending to buy is of paramount importance. The financial statements of the company for the past 5 years is the ideal scenario if this is available. This should include balance sheets, cash flow statements, loan statements and terms of loans, income statements and documentation relating to shareholders’ equity. Careful consideration should be given to any documentation that highlights the asset in question.
Company Information: A general overview of the company will give a good indication of the company’s current status. Things to include are the corporate structure, management structure, strategic business plans, market potential, company goals, details of products and services, pricing, details of research and development now and proposed, company personnel and assets of the business.
Legal Information: The current and potential legal position of the company needs to be considered. This includes any litigation the business is involved in, any potential litigation on the horizon, any legal agreements with creditors or customers, supplier contracts, restrictive covenants, shareholder agreements, description of shares and share capital, details of banking facilities and compliance of the company with corporate governance laws.
Intellectual Property: All agreements dealing with IP, property rights and licensing agreements, challenges to IP rights and protection procedures, schedules of consulting agreements, licenses, patents held, trademarks/trade names, copyrights, domain names and details of any trade secrets.
Information In The Public Domain: Obtain and review external/media information in the public domain that may be relevant such as corporate literature, press cuttings, PR and promotional material. If possible, collate any market research reports conducted and customer satisfaction surveys.
Technical: Obtain details of the IT systems and backup arrangements. Establish whether the IT system is compatible with the acquirer’s business and assess whether it is adequate for current and future needs, establish where any secure data is located and who has access, obtain a copy of the physical security, disaster recovery, back up/redundancy, and prevention features. Has any bespoke software been developed and, if so, are you familiar with it, and what IT security is in place, including that used for online transactions.
Human Resources: Obtain a list of employees showing length of service, age, salary and benefits, job title, pension details, profile of each director and senior managers. Obtain a copy of the Health and Safety policy statement, risk assessments and accident book. Be clear on all Pension arrangements and any final salary liabilities.
Taxation: Tax returns, documentation and provisions for the last six years. Consider the tax impact of the proposed transaction and any ways to structure this efficiently. Summarise tax provisions for the last six years if possible.
How we can help
We have a proven track record of helping clients purchase assets carrying out all the necessary due diligence in a comprehensive manner. The list above covers the basics of a checklist and we will guide you through the process and ensure all checks are carried out swiftly and efficiently. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact our Corporate Solicitors
It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of saving you money and ensuring you achieve a positive outcome.
To speak to our Corporate solicitors today, simply call us on 0345 901 0445, or allow a member of the team to get back to you by filling in our online enquiry form. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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