20.05.2021

Due diligence: when is it worth doing?

Paulina Opiełka

There are rare occasions when due diligence is unnecessary from the perspective of an investor or rights buyer. The question should not be when it is worth commissioning due diligence, but why it is worth doing. The answer is surprisingly simple.

Is due diligence obligatory?

No one will force an investor to thoroughly check the company in which he wants to invest. However, it is in the investor’s interest to conduct such due diligence because it serves to avoid buying “a pig in a poke”. In principle, no buyer is under any obligation to do so, but conducting due diligence allows to minimize the risk of making an unsuccessful investment and due diligence helps to fully understand the mechanisms governing a given company.

Thanks to this, the buyer is fully aware of the consequences of his decision. Moreover, thanks to the research, the investor has a comprehensive view of the company, its projects, and previous activities. Having this knowledge will certainly help to better manage the company after the transaction, although it is not the only purpose for which due diligence is performed.

When then?

Before moving on to direct investment. Due diligence is most often performed in the event of an acquisition of a business, shares, or stocks, and also in the event of a merger of companies. It is also commissioned when a company is introduced to public trading, seeks external investors, or undergoes debt relief or expropriation.

It is not necessary to order a comprehensive audit. Depending on the needs and the specificity of a given company’s activity, due diligence can be performed on a selected project carried out by a given company. Such a method will allow you to save time (and money) while obtaining the needed information. That is why it is so important to define your needs before meeting with the external entity obliged to conduct the research.

External entity – acting in the buyer’s interest

Defining needs will not only help to decide on the right research path, but it will also influence the choice of appropriate experts. Depending on the specifics, these will be experts, auditors, lawyers, tax advisors.

Each of these persons is required to sign a confidentiality agreement, which is worth remembering when signing the agreement. The chosen specialist can not in any way be correlated with the seller – to provide the most objective expertise – thus acting in the interests of the buyer.

What to pay attention to

First of all, at the initial stage, it is worth determining the scope of the study, so as not to overlook issues of importance to the investor. A clue here may be the industry in which a given company operates. Our lawyers have repeatedly supported investors in due diligence in such industries as real estate, TMT, IT, private equity. They approach each transaction individually, adjusting the action to the investor’s needs on an ongoing basis. Our experts will help to determine what risks are involved in investing in a company and whether the company meets all legal conditions. In addition, KWKR lawyers are ready to provide legal support at every stage of the transaction – from market research through preparation of agreements and negotiations to the finalization of the transaction.

Do you want to be up to date? Sign up for our newsletter

By subscribing to our newsletter, you consent to the sending of information by e-mail on important events in the field of law, legislative changes and the activities of the Law Firm.

read more

The administrator of your personal data is KWKR Konieczny Wierzbicki i Partnerzy S.K.A. with headquarters in Krakow, ul. Kącik 4, 30-549 Krakow. Your data will be processed for the purpose of sending our newsletter. You have the right to request access to your personal data, their copies, rectification, deletion or limitation of processing, as well as the right to object to the processing and to lodge a complaint with the supervisory authority. More details can be found in our Privacy Policy.

Contact

KWKR Konieczny Wierzbicki and Partners Law Firm
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Administratorem Twoich danych osobowych jest KWKR Konieczny Wierzbicki i Partnerzy S.K.A. z siedzibą w Krakowie, ul. Kącik 4, 30-549 Kraków.
Przetwarzamy Twoje dane wyłącznie w celu udzielenia odpowiedzi na wiadomość przesłaną przez formularz kontaktowy i dalszej komunikacji (co stanowi nasz prawnie uzasadniony interes) – przez czas nie dłuższy niż konieczny do udzielenia Ci odpowiedzi, a potem przez okres przedawnienia ewentualnych roszczeń. Masz prawo do żądania dostępu do swoich danych osobowych, ich kopii, sprostowania, usunięcia lub ograniczenia przetwarzania, a także prawo wniesienia sprzeciwu wobec przetwarzania oraz wniesienia skargi do organu nadzorczego. Więcej szczegółów znajdziesz w naszej Polityce Prywatności.
Warszawa

Rondo ONZ 1,

00-124 Warszawa

+48 12 3957161

kontakt@kwkr.pl

Chcesz być na bieżąco? Zapisz się do naszego newslettera

Zapisując się do naszego newslettera wyrażasz zgodę na przesyłanie drogą e-mail informacji na temat istotnych wydarzeń z dziedziny prawa, zmian legislacyjnych oraz działalności Kancelarii.

czytaj więcej

Administratorem Twoich danych osobowych jest KWKR Konieczny Wierzbicki i Partnerzy S.K.A. z siedzibą w Krakowie, ul. Kącik 4, 30-549 Kraków. Twoje dane będą przetwarzane w celu wysyłki naszego newslettera. Masz prawo do żądania dostępu do swoich danych osobowych, ich kopii, sprostowania, usunięcia lub ograniczenia przetwarzania, a także prawo wniesienia sprzeciwu wobec przetwarzania oraz wniesienia skargi do organu nadzorczego. Więcej szczegółów znajdziesz w naszej Polityce Prywatności.

 

Do you want to be up to date? Sign up for our newsletter

By subscribing to our newsletter, you consent to the sending of information by e-mail on important events in the field of law, legislative changes and the activities of the Law Firm.

read more

The administrator of your personal data is KWKR Konieczny Wierzbicki i Partnerzy S.K.A. with headquarters in Krakow, ul. Kącik 4, 30-549 Krakow. Your data will be processed for the purpose of sending our newsletter. You have the right to request access to your personal data, their copies, rectification, deletion or limitation of processing, as well as the right to object to the processing and to lodge a complaint with the supervisory authority. More details can be found in our Privacy Policy.