What gets reviewed
Legal due diligence usually covers the company's formation and ownership records, its material contracts, pending and threatened litigation, intellectual property, employment practices, real estate, permits, and regulatory compliance. The aim is not to read every document but to find what affects value or creates risk: a key customer contract that ends on a change of control, a trademark the business depends on but does not own, or workers treated as contractors whose status is questionable. The scope should match the deal, since a minority investment, a full acquisition, and a loan call for different depth. Financial and tax diligence usually run alongside and are handled by accountants.
For the company being reviewed
Sellers and companies raising money benefit from preparing before a data room opens. Gather signed versions of key contracts with all amendments, the stock ledger or membership records, board and owner consents, IP assignments, and licenses. Gaps found by the company itself can be fixed or disclosed on its own terms; gaps found by the other side tend to become price reductions or special indemnities. Be careful about uploading privileged communications or sensitive personal data, since sharing them can waive protections or create privacy issues. Assign one person inside the company to coordinate responses, so that questions from the other side's team are answered consistently.
Turning findings into protection
Diligence findings matter only if they change the deal. We report issues by significance rather than in a document-by-document summary, and we translate each one into a response: a closing condition, a specific representation, an indemnity, a price adjustment, or a decision to walk away. We also flag issues that need attention after closing, such as consents to collect or filings to update. At the start we agree on scope, materiality thresholds, and timing, so that the review supports your decision without turning into an open-ended project. Findings that are minor in isolation can still matter when several of them point to the same weakness.
