Due Diligence

Prudent due diligence enables parties to make informed decisions.

Intellectual Property
Due Diligence

Intellectual property due diligence focuses on the investigation and evaluation of a company’s IP assets, such as patents, trademarks, copyrights, and trade secrets. This process is crucial, especially during mergers, acquisitions, or other significant business transactions. The scope of the process can range from a bare minimum of review to comprehensive reviews of the associated business operations, processes, and personnel. Regardless of the nature of the transaction, the main goal in each situation is to ensure ownership or claimable rights and avoid credible third-party intellectual property claims. Generally, effective intellectual property due diligence will include the following:

• Assessment of IP Assets: Evaluating the scope, validity, and enforceability of the company's IP portfolio.

• Ownership Verification: Confirming that the company has clear ownership of its IP assets and that there are no disputes or encumbrances.

• Risk Analysis: Identifying potential risks, such as oppositions, pending litigation or possible infringements, that could affect the value or usability of the IP.

• Valuation: Determining the financial value of the IP assets, which is essential for negotiating the terms of a transaction.

• Compliance Check: Ensuring that the IP assets comply with relevant laws and regulations.

IP due diligence helps buyers and sellers make informed decisions by providing a clear understanding of the value and risks associated with the IP assets involve.

Transactional
Due Diligence

Transactional due diligence focuses on the investigation and evaluation of a company’s legal, financial and operational aspects. This process is intended to identify any risks or liabilities that could affect the transaction being contemplated. Generally, transactional due diligence will scrutinize the following:

• Organizational documents: Collect and closely examine a company’s formation documents, equity issuances and transfers, agreements among shareholders or owners, and documents relevant to good standing.

• Financial and accounting documents: Collect and closely examine copies of financial statements, key reports linked with planning, budgets, inventory and related matters, as well as loan documents and security agreements.

• Material asset documents: Collect copies of joint venture, partnership, and collaboration agreements and any agreements making up the top 10% of the company’s revenues data and closely examine those material assets for liabilities and indebtedness.

• Intellectual property documents: Obtain information on all registered and unregistered intellectual property and review of any agreements, instruments, certificates of registration, and correspondence relating to the acquisition, assignment, licensing, ownership, and registration thereof.

• Environmental and regulatory compliance documents: Collect copies of regulatory filings, reports, licenses, permits, consents, registrations and approvals for compliance issues/concerns.

• Insurance and litigation documents: Obtain information on pending and threatened litigation, and any orders, decrees, injunctions, judgments or settlements.

• Operational documents: Obtain details on customers, suppliers, distributors, employees, consultants, contractors and related agreements (e.g., confidentiality/sales and marketing/purchase and supply) that provide data on strategy, compensation, benefits and disputes. To the extent not addressed, obtain policies related to protection of privacy and information security.

• Tax documents: Identify which states and local jurisdictions the company has to file tax returns and pay taxes for compliance issues/concerns.