The Due Diligence (DD) is well known. With it, in the context of a sales transaction of a company, interpretation is given to the research obligation that rests on the buyer. After all, if you buy something you want to know what you are buying. Moreover, the buyer can lose claims to things that later turn out not to be right, if he does not appear to have done a proper investigation.
The DD is the final stage of an entire process. In this intensive process, the company must also be kept running. Moreover, the stakes are high. In this pressure cooker, the pressure can mount quickly. If in this situation things come to light that turn out not to be right, this causes a lot of stress. Sometimes there is no time to fix things and this can have a negative impact on the selling price.
Vendor Due Diligence
Therefore, a Vendor DD may be wise. This is a proprietary investigation with which you, as the seller, want to expose any defects in advance. Then you can quietly work on them and correct them. This then allows you to enter the sales process with confidence and comfort that all is well.
The legal aspect plays an important role in this, because the consequences can be far-reaching if things turn out not to be right. And, moreover, not always clear in advance, also in terms of size. In a sales process the buyer often makes a big deal about these aspects.
Consider the situation where pension obligations have not been properly discharged. Or the situation that a complex legal dispute has reached an impasse, a dismissal of an employee that is not properly sealed, the lease of the business premises that does not appear to be properly structured, collective bargaining obligations that are not complied with, licenses on software that are not properly arranged, commercial contracts that are not properly arranged, the sale and leaseback construction that does not appear to be properly structured and therefore unnecessarily weighs on the financing possibilities, et cetera.
Sales process
All issues that often arise in a takeover when it is not convenient. And which can be prevented by checking this in advance. Prior to the sales process, the seller is in full control of the legal aspects of the business. Any deficiencies can then still be put right in a well-considered and calm manner.
