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Due Diligence – when and why?

September 2009 - Corporate & Commercial. Legal Developments by Weinhold Legal v.o.s.

The term “Due Diligence” is commonly used when referring to a process through which a potential buyer evaluates a target company, an enterprise or its assets. Typical due diligence usually focuses in particular on the area of law, taxes and finance with the aim on emphasizing strengths and weaknesses of the target and detecting risks connected with its acquisition. For the sake of simplification, we will use the term “enterprise” or “target” when talking about subject matter of the due diligence.

Simply put, the buyer conducting due diligence investigates all relevant aspects of the past, present, and predictable future of the target and makes sure that the target is in the condition as represented by the seller.

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Due Diligence – when and why?