Legal documents for due diligence include documents that pertain to a company's assets, business operations, and potential liabilities. This type of review is typically conducted prior to a merger or acquisition or other business transaction and is crucial in determining the value of the business. This review can help identify potential risks by reviewing contracts or agreements, as well as any restrictions or encumbrances placed on assets.

In addition to looking into the physical assets of a target business, lawyers frequently examine financial documents like state and federal tax returns, bank statements and credit reports. They will also look at the company's contracts, employee benefits and payroll, as well as the organizational structure. Legal due diligence is a procedure that can last anywhere from 30 to 60 days. For more complex transactions the duration can increase significantly.

Attorneys will also examine the regulatory aspects, such as any antitrust concerns or compliance concerns analyses(opens try this site in a new tab). They might also analyze the current legal landscape of the company including any litigation that involves the target company or its officers.

The most important element of an investigation of legal due diligence is assessing the potential liability for the transaction. Attorneys often suggest that you purchase representations and warranties insurance (opens in the new tab) for the purchase. This is particularly important in cases where the buyer is not familiar with the company of interest and its history. It is a way to protect the seller in case of incorrect claims or representations made by the buyer. Last but not least lawyers can look over any documentation related to employee policies of the company such as golden parachutes or severance packages(opens in an entirely new tab) which may be affected by changes in ownership.