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Newco Project II
Wilfret Anderson
Daphne J. Dorman
Edsel Goyo
Isabel Pereira
Law 529: Legal Environment of Business
University of Phoenix
David Sabot, Esq.
May 30, 2006
Part A - Legal Due Diligence Checklist
Assessing risks and issues while determining whether to purchase a company is the number one skill venture capitalists must possess. The prospective buyer of Five Friends Construction must investigate and gather all information about the company and its business assets. The
purpose of this it to decide whether to proceed with the initial transaction on the initially discussed terms, establish areas of risk that need particular attention or, if justified, withdraw from the proposed investment (Global Law Review, 2005). Creating a due diligence checklist is the way to critically assess a companies current and potential profitability.
Elements of Legal Due Diligence Checklists
There are at least sixteen elements of a Legal Due Diligence checklist. The organization and its good standing, financial information, physical assets, real estate, intellectual property,
employees and employee benefits, licenses and permits, environmental issues, taxes, material contracts, product or service lines, customer information, litigation, insurance coverage, professionals, and articles of publicity completes a thorough list of risks to research before purchasing a company (FindLaw, 2005). While each of these list items is important, four major issues arise and the focus will remain on them. Financial information, employees and employee benefits, environmental issues and a litigation summary are the focus of acquisition ...