A due diligence refers to a set of different actions and tasks aimed at an independent and objective analysis of the position, condition and characteristics of the object of a due diligence. The master's thesis shows which subjects are usually interested in conducting a due diligence and what goals they pursue.
There are many types and forms of due diligence, with new forms of due diligence being developed or gaining in importance in business practice. As a rule, the due diligence is carried out by external experts in a certain field, although the client can also entrust the execution to his own employees.
The exact content and manner of performing the due diligence is the subject of an agreement between the client and the provider. Consequently, it is crucial that the agreement contains a precise definition of the rights and obligations of each party, and that the client's expectations and needs are clearly defined.
The purpose of this master's thesis is to present the role and importance of a legal due diligence in the process of acquiring business shares or stocks of a certain company. Legal due diligence is one of the standard stages in the process of acquiring a business share, which may significantly impact and co-shape further stages. In extreme cases, the results of the legal due diligence may also lead the client to withdraw from the planned acquisition of a business share. The object of legal due diligence in the process of acquiring a business share is the position and condition of the target company. The master's thesis shows who, under what conditions and on what legal basis can allow a due diligence to be carried out in a limited liability company and in a joint stock company.
Furthermore, the course of a typical legal due diligence in practice is presented. As part of the legal due diligence, a number of documents and data are examined, which are usually forwarded to the data room, which can be accessed by the provider. In the case of selected legal areas, it is shown which facts and circumstances the provider must pay particular attention to when conducting a due diligence, as they may pose a significant risk to the client.
In the last part of the master's thesis, the consequences and implications of a legal due diligence on the process of acquiring a business share are presented with concrete examples. The results of the due diligence have a significant impact on the provisions of the contract on the sale and transfer of the business share. As a rule, the risks identified in the legal due diligence process are addressed by adjusting the amount of the purchase price and the mechanism of its payment. They further require an appropriate formulation of contractual representations and warranties, conditions precedent, covenants and indemnification provisions. Moreover, the conduct of a legal due diligence also significantly affects the seller's liability for the characteristics of the target company, as it is a reflection of the caveat emptor principle.