Key Tips for M&A Due Diligence

 Posted on June 30, 2025 in Business Law

Mergers and acquisitions represent pivotal moments for businesses that can lead to business growth, but they also come with significant legal and financial risks. Even the most promising deals can unravel without proper legal due diligence.

Thus, due diligence process serves as your critical safeguard against hidden liabilities, regulatory violations, and structural impediments that could derail a transaction. From identifying undisclosed litigation risks to ensuring proper corporate authority for the transaction, proper due diligence is critical to identifying those risks and ensuring a smooth and successful transaction, whether you are a buyer or a seller. An experienced Greenwich Connecticut corporate attorney can represent you in the M&A due diligence process.

5 Tips for a Successful M&A Due Diligence

Start Early and Stay Organized

Begin your due diligence process well in advance of negotiations intensifying. Buyers need enough time to review the target company’s records and understand its legal, financial, and operational health. Sellers, on the other hand, should prepare in advance by organizing key documents, cleaning up any regulatory or compliance issues, and anticipating questions that may arise. The earlier you start, the more time you will have to address potential issues before they become deal-breakers.

Know What You Are Buying

One of the primary goals of due diligence is to understand exactly what assets and liabilities are being acquired. This includes a careful review of corporate structure, intellectual property, contracts, licenses, real estate, employment matters, and any ongoing litigation or regulatory issues.

Scrutinize Financials and Tax Compliance

Reviewing audited financial statements, tax returns, and internal reports gives insight into the company’s performance and helps identify any red flags. Buyers should verify that financials reflect true value and that tax obligations have been properly met.

Assess Key Contracts and Customer Relationships

Material contracts can significantly impact valuation and post-closing integration. Are contracts assignable? Do they contain change-of-control provisions? Buyers must assess whether important relationships will remain intact after the deal closes.

Understand Employment and Benefits Issues

Employee matters are often overlooked, although they can carry major legal implications. Review offer letters, compensation plans, non-compete agreements, and benefits obligations. Make sure to understand whether key employees will remain and whether there are risks of employment-related claims.

Call a Greenwich, Connecticut Corporate M&A Attorney

M&A due diligence is document-heavy and legally complex. The experienced New York Metro Area lawyers at Ivey, Barnum & O'Mara, LLC have the M&A experience to help uncover potential