“Am I too optimistic or is the other adviser too pessimistic?” I wondered after concluding a call with an adviser who had ranted about due diligence issues.

Due diligence can indeed be frustrating for all parties involved.

For the management of the target company tasked with responding to due diligence requisition lists, it means juggling requests from various advisers, typically lawyers, tax advisers, and financial advisers. This additional workload often compounds their already busy schedule.

For lawyers tasked with conducting legal due diligence, clients frequently demand swift reports, especially in M&A transactions. However, it takes time for the target company to provide the relevant documents for legal due diligence. Reviewing the documents carefully to piece the puzzles together can be time-consuming, particularly if the documents are not in order.

There was one occasion where, after weeks of reviewing and analyzing documents for legal due diligence, the management of a target company brushed off our concerns about non-compliance and told us to “do our homework.” We, of course, had done our homework before we raised the issue. We laid out the facts and explained why the issue was a non-compliance. In the end, the management of the target company agreed with our findings.

We assist clients in analysing issues through our legal due diligence, tailoring solutions to address issues discovered during the process in a manner that aligns with their business objectives. Clients engage us to identify and resolve issues within the context of their circumstances.

Discovering issues during due diligence should not come as a surprise. It is an integral part of the process. In the end, it is about finding solutions and moving forward with clarity.

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#duediligence

This post was first posted on LinkedIn on 2 May 2024.