In an acquisition the buyer examines all the records of the target company: contracts, lawsuits, financial statements, permits. This means a very high-volume document flow in a short time, and the whole flow must stay confidential until the announcement is made.
Stages of the process
The stages of preliminary talks, due diligence, contract and closing are followed. Each stage generates different documents. The plan is built in stages.
Non-disclosure agreement
The process begins with a non-disclosure agreement (NDA). The text binds the parties. It is carried over exactly.
Letter of intent
The main terms are first set out in a letter of intent. Binding provisions are kept distinct. The modality is preserved.
Due diligence file
The target company's records are examined in bulk. Volume rises in a short time. Capacity is reserved.
The density of the document volume
Hundreds of documents are reviewed within weeks. The process is tiring. The team is built in advance.
Contract inventory
All the target company's contracts are listed. Critical provisions are scanned. The term list is kept in common.
Litigation and dispute records
Pending lawsuits are a risk factor. The documents are legal in nature. Expertise is sought.
Financial records
Statements and audit reports are examined. Numerical fields are sensitive. A review layer is added.
Permit and licence records
Whether operating permits will stay valid after the transfer is asked. The documents are gathered. A list is drawn up.
Intellectual property inventory
Trade marks, patents and licences are a separate set. The records carry scope information. They are rendered meticulously.
Personnel records
Employee information carries personal data. Access is narrowed. The rule is applied strictly.
Share purchase agreement
The central text of the process is the share purchase agreement. The representations and warranties sections are decisive. Fidelity is essential.
Representations and warranties
The representations given by the seller give rise to liability. The wording is not weakened. The scope is preserved.
Closing conditions
The conditions required to complete the transfer are listed. The list is carried over in full. No article is skipped.
Competition clearance files
Some transactions are subject to the approval of an authority. An application file is prepared. The format is followed.
Version management
Texts change often during negotiation. The version number is written on every delivery. Confusion is prevented.
The rigidity of confidentiality
A leak of information before the announcement can wreck the transaction. Access is defined person by person. A record is kept.
Post-closing integration
After the transfer, policies and procedures are harmonised. A new wave of documents arises. The plan is extended.
Working with adviser teams
Legal and financial advisers work together in the process. Requests come through more than one channel. Coordination is set up.
The intensity profile of the process
In these jobs volume is not spread evenly; the flow is very high for weeks at the due diligence stage and then suddenly low. A capacity promise given without knowing this profile cannot be kept. The team is reserved at the outset. The plan comes in waves.
Limits of liability
What is described here is for information purposes and does not replace a legal or financial opinion. Assessment belongs to qualified advisers. The limit is stated.