Once an offer has been accepted on a global corporate transaction such as in a merger or during an acquisition, an exhaustive due diligence process begins.
Due diligence aims to confirm or correct the acquirer’s assessment of the value of the target company, verify the legal and administrative standing of the organization, and understand how and with whom they do business through a detailed examination and analysis of every aspect of the company’s operations. Global deals in the works for years can be scuttled by a single missing document, underscoring the critical importance of thorough and meticulous due diligence investigations. Attorneys assisting clients on global transactions have the added challenge of conducting this work in foreign jurisdictions and obtaining - in a country they may not be familiar with - as much information as they can in order to provide their clients with sounds recommendations on the deal at hand.
In this article, we explore what legal counsel must keep in mind when conducting due diligence outside of the U.S., and more importantly, what types of documents are commonly examined during this process.
Performing due diligence abroad: what’s involved
In order to conduct thorough due diligence, attorneys must research and gather a variety of documents across functions such as legal, financial, sales, marketing, and human resources.
This can be an extensive process that gets more complicated when dealing with international deals involving one or more countries. Each due diligence investigation is unique, and each jurisdiction will have certain requirements in order to obtain documents. Additionally, documents are always issued in the local language and may not be available in English. Therefore, an official translation will need to be generated. Naming conventions can also differ and understanding the differences is key to ensuring you get the documents you need. In some cases, U.S. equivalents may not be a perfect match, and additional documents will be required to supplement missing information.
You may also run into differences in document turnaround times than are commonly seen in the U.S. This can be especially challenging for attorneys when they are working under tight deadlines.
Global due diligence: Essential documents
The types and quantities of documents required during due diligence depend on the specific circumstances of the deal. Our infographic breaks down the category of information and common documents searched in each.