Corporate specialist attorney, what should I prepare before legal due diligence?

Hello. This is the corporate specialist attorney at Daeryun (Limited) Law Firm.

You asked about matters to prepare before legal due diligence in the M&A process.

Since M&A is a procedure that most companies are not familiar with, you may experience confusion in preparation.

In particular, since legal risks may be discovered through Legal Due Diligence, this can affect not only whether to enter into a contract but also adjustments to transaction conditions or amounts and the subject of damages, so prior preparation is important.

One of the things to check first before legal due diligence is the inspection of "contingent liabilities."

Contingent liabilities refer to uncertain debts that have not materialized at present but may arise depending on changes in future circumstances or external factors.

Such contingent liabilities are mainly related to the seller's Representations & Warranties in the contract.

Therefore, I would recommend listing items where contingent liabilities may arise centering on those items and preparing in advance.

Representative contingent liabilities are related to taxes and lawsuits, but additional risks may arise depending on the company's industry or internal structure, so please check this thoroughly.

To preemptively block such legal risks and contingent liabilities, please establish a systematic strategy with legal advice from a corporate specialist attorney.