Due Diligence In Business Acquisitions

(republished from daily.nb.org)

In previous articles, we discussed confidentiality clauses (NDA/CA) and Memoranda of Understanding (MOUs) in business acquisitions (see here and here). Today, we examine the next step in the acquisition process: the pre-contractual investigation of the business, commonly referred to as due diligence (DD).

Due diligence is one of the most crucial stages of the acquisition. It is where the prospective buyer gains deeper insight into what they intend to purchase, uncovering potential issues, defects, or weaknesses. Due diligence typically follows the signing of the MOU and lasts anywhere from 1 to 6 months, depending on the volume of data and the size of the review team.