Legal Due Diligence
Legal due diligence is an essential process in mergers and acquisitions. It provides a comprehensive review of the target company’s records to identify potential risks, liabilities, and compliance issues. While each transaction is unique, certain recurring “red flags” often emerge during the course of a due diligence review. Recognising these issues early is crucial, as they may significantly affect the valuation, negotiation, or even the feasibility of a deal.
- Corporate Structure
– Missing or inconsistent company resolutions, minutes
– Shareholders or directors not properly documented - Contract
– Change of control clauses that may be triggered by the transaction.
– Contracts with unusual termination, renewal, or penalty clauses
– No written agreements for key business relationships - Licenses
– Missing or expired licenses/permits
– Non-compliance with conditions attached to existing approvals. - Employment
– No employment contracts - Financing
– Change of control clauses that may be triggered by the transaction.
– Personal guarantees by shareholders - Litigation
– Pending or threatened litigation, which may result in material liabilities or prolonged disputes.
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Author(s):
Ashley Yeo, Founder
E: ashley@yeoashley.com.my
Nicole Goh, Associate
E: nicole.goh@yeoashley.com.my
Tan Nian Tze, Pupil
E: niantze.tan@yeoashley.com.my
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Hello! This is Yeo Ashley & Partners, a law firm based in Kuala Lumpur, Malaysia. We provide comprehensive services tailored to growing businesses to meet your complex needs.
Our experiences include structuring of company shares for purposes of fundraising and incentivising employees, capital markets, mergers and acquisitions, regulatory compliance, and other shares-related matters, ensuring efficient and compliant processes. Our dedicated team is committed to empowering companies with the tools and guidance needed to navigate these critical areas, enabling them to focus on growth and success with confidence.
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This article is intended to provide general information and does not constitute and/or should be relied on as any legal opinion or professional advice. For more information, you may reach out to Yeo Ashley & Partners, a law firm based in Kuala Lumpur, Malaysia.
