Mergers and Acquisitions Due Diligence

Mergers and acquisitions require a substantial burden of due diligence on the part of the buyer and the involved financial institutions. Attention to detail is crucial to ensure that the institution continues to function in a manner consistent with the regulations and laws that govern it. Successful acquisitions and mergers result in the integration of systems encompassing information technology, intellectual property, the Bank Secrecy Act, and compliance with all consumer protection laws.

Skilled investigators at Justice Solutions Group will conduct reputational reviews, business, and personal background checks, forensic accounting, financial investigations, and even surveillance, if necessary, to provide an accurate portrayal of the legitimacy of a company.

What is Involved in M&A Due Diligence

Before committing to a transaction, buyers will want to assure that they know what everything possible about what they are purchasing. The purpose of a thorough investigation is to assure the buyer or investors that what they see is what they will be getting in the acquisition.

A complete due diligence check for a company will involve numerous parts. Each investigator has extensive experience explicitly related to mergers and acquisitions and can help determine the best course of investigation for each M&A.

Basic Due Diligence

The due diligence process will vary for each company. Basic due diligence for an acquisition may include:

• A media search of all internet, television, and print media to help establish a reputational overview of the company and its operators
• A civil litigation search for any past, present, and pending litigation at both state and federal levels
• Bankruptcy search to ensure the company has revealed any history of bankruptcy
• Research into any potential government sanctions, past, and present that directly impact the company
• A business credit report to provide a snapshot of the financial health of the company
• A thorough records search of incorporation and ownership history

A basic due diligence search can often uncover information that will help guide the rest of the due diligence process.

Criminal Background Checks for all Principals Involved

A standard criminal background check for all principals involved in the company to be acquired is an excellent risk management tool. Justice Solutions Group will provide a comprehensive check of:

• Federal criminal history
• Felonies
• Misdemeanors
• Sex offender searches
• Motor vehicle reports
• Global sanctions check if it is appropriate to the situation

Understanding whom you are doing business with is essential to the informed decision-making process. Our thorough background checks ensure you have a full picture of the principals of any M&A.

Financial Due Diligence

Financial due diligence requires the acquiring party to have as clear a picture as possible of the business’s overall financial health. Our team of expert investigators will work closely with you to determine how deeply you need to delve into the past and present the financial standing of the targeted company. Financial due diligence can include:

• Inventory listings
• Comparing recent financial statements to those of prior years
• Audit reports
• A search for all unregistered and registered securities
• At least the past three years of the auditor’s Reports and Financials
• Other reports requested by your financial advisor and CPA

To fulfill the obligation of due diligence in a merger and acquisition, an investigation should include:

• Full disclosure of the seller’s outstanding liabilities
• Other obligations that will be assumed by the buyer
• A complete understanding of all outstanding contracts, with particular attention to those with problematic clauses or dates
• A full litigation risk profile as well as outstanding judgments or liens
• Any intellectual property issues

The extent of the due diligence investigation will also depend on whether it is a private company acquisition. Private companies have not been subjected to the scrutiny of public markets, have more latitude for sub-par record keeping, and will require digging deeper into the company’s structure to make sure all potential risks are flagged.

You can view the cost of our Due Diligence and Background services  in detail in our client portal, OnTrial. There's no credit card required to register, no monthly fees, just clear, transparent pricing. Register for Free Want to know more? Click here to learn about OnTrial.

Or just book a consult or give us a call at 800.278.9329 - we're looking forward to talking with you about how we can help.

At Justice Solutions Group, we understand how vital due diligence is before a merger or acquisition. We strive to provide a due diligence process that ensures there are no details left undisclosed. Before an entity can raise capital or go public, various regulations must be met. Our due diligence investigations can provide a compliance check for the U.S. Patriot Act, OFAC, and other regulations.

An exhaustive due diligence investigation can also help the negotiation process, allowing you to negotiate a lower price if problems are found. A thorough investigation will ensure all claims made by the other side are substantiated.

Linking your reputation and finances to another entity is a serious endeavor. A due diligence investigation from a trusted source will serve as a powerful risk mitigation tool to protect the reputation you have worked hard to build.