Due diligence

Due diligence

We conduct extensive due diligence investigations for various organizations. We analyze a company's financial books, its short- and long-term legal obligations, and assess opportunities and risks. Due diligence investigations are relevant in cases such as mergers, acquisitions, joint ventures, financing, and investments. Based on a due diligence report, parties are able to make a well-considered assessment of the opportunities and risks of a transaction. In practice, due diligence investigations play a major role in the negotiations of various corporate transactions.

We have the knowledge and expertise to assume diverse roles: from advisory services to dispute resolution. We have an experienced team of lawyers and legal experts in the field of due diligence. Contact us to discuss the possibilities.

Types of due diligence investigation

Not every investigation is the same. In an early phase, a buyer often conducts a preliminary due diligence : an exploratory investigation based on limited information, such as an information memorandum. The actual investigation before the conclusion of the agreement is called the investigative due diligence; based on this, the buyer decides whether to proceed with the acquisition. If the purchase agreement has already been concluded, a confirmatory due diligence to confirm previous assumptions. The seller can also commission their own investigation – the vendor due diligence – to position the company more quickly and attractively in the market and to prevent surprises. We advise on which type suits your transaction, whether you are an international group or the baker on the corner looking to acquire a fellow company.

Which topics do we investigate?

A full-fledged due diligence investigation looks beyond the numbers. Our lawyers and in-house counsel map out, among other things:

• Legal: articles of association, board and shareholder resolutions, shareholder agreements, significant commercial contracts, and ongoing or impending disputes.
• Corporate governance: the decision-making structure and control within the company (see also our corporate governance).
• Employment Law and HR: employment contracts, pension schemes, collective labour agreement obligations and the position of directors.
• Intellectual property and privacy: trademarks, patents, licenses and GDPR compliance.
• Licenses and compliance: required licenses and compliance with applicable regulations.
• Fiscal, financial and commercial: tax position, financing agreements, client contracts and market position.

Particular attention is paid to change of controlprovisions: clauses that give a contracting party the right to terminate a significant agreement as soon as control over the company changes. Such provisions can profoundly impact the value of a deal.

Duty to investigate and duty to disclose

Due diligence literally means 'appropriate care'. The buyer has a duty to investigate: he may not rely blindly on the seller's statements and must investigate the important aspects of the business himself. Conversely, there is the duty to disclose , who must share relevant information. Both duties have been developed in case law and together determine who bears which risk. If a buyer falls short in his investigation, it will be more difficult for him to invoke defects afterwards. If the purchased business does not correspond to what the buyer could reasonably expect, the rules regarding non-conformity (Article 7:17 of the Dutch Civil Code), error (Article 6:228 of the Dutch Civil Code), and potentially unlawful act (Article 6:162 of the Dutch Civil Code) come into play. A carefully conducted due diligence investigation strengthens your legal position should a dispute arise later.

From findings to guarantees and indemnities

The value of a due diligence investigation lies not only in identifying risks, but above all in what you subsequently do with the findings. While the accountant focuses on the figures, our lawyers translate the findings into concrete agreements in the purchase agreement. Identified risks are covered by warranties (the seller guarantees something) and indemnities (the seller bears a specific, known risk). The purchase price, suspensive conditions, and any earn-out arrangements are also partly determined by the outcome of the investigation. In this way, a due diligence report becomes a negotiating tool that directly impacts the legal documentation of the transaction.

How does a due diligence investigation proceed?

In practice, the investigation proceeds in a structured manner. The seller opens a secure data room in which the relevant documents are collected. Subsequently, we ask targeted questions in a Q&A process and analyze the submitted documents. The findings are recorded in a clear due diligence report, detailing the identified risks and concrete recommendations for each topic. We guide you through this process and ensure that no crucial point is overlooked – whether in a large-scale international acquisition or an SME transaction.

Due diligence within Corporate, Mergers and Acquisitions

A due diligence investigation rarely stands alone. It is an integral part of our broader Corporate, Mergers and Acquisitions and aligns closely with processes such as mergers and acquisitions, joint ventures and partnerships , and private equity, management buy-outs, and exits. Because our mixed teams of lawyers and in-house counsel oversee the entire process, the investigation and the final contractual documentation align seamlessly.

Frequently asked questions about due diligence

What is a due diligence investigation?

It is an investigation in which a buyer (or seller) systematically maps out the legal, financial, tax, and commercial aspects of a company, so that parties can make a well-considered assessment of the opportunities and risks of a transaction.

Is a due diligence investigation mandatory?

It is not legally required, but the duty of investigation resting on a buyer makes it virtually indispensable in practice. Without thorough investigation, you run the risk of being unable to recover defects from the seller afterwards.

How long does a due diligence investigation take?

That depends on the size and complexity of the company. An investigation at a small SME can be completed within a few weeks, while a cross-border acquisition requires more time. We tailor the pace to your transaction.