M&A ' Detailed Legal Due Diligence Is Both A Benefit To The Seller And Buyer?

• Published date: 10 June 2021
• Law Firm: Vilgerts
• Author: Gints Vilgerts

Latvian law leaves all responsibility for the risks related to selling or buying a company in the hands of the respective parties to the transaction. In turn, sellers and buyers are mostly characterized by recklessness, time constraints, and a lack of bad experience. It is rarely the case the sellers or buyers of a company are willing to devote significant time and resources to conduct a detailed legal due diligence or achieve a proper systematic disclosure of information. A detailed legal due diligence is just one of several ways of valuable fact-finding. Depending on the context of the transaction and the business model in question, the following categories within a legal due diligence could be part of a transaction: financial, tax, merger control, technical, AML/KYC, environmental, IT, HR, etc. Normally, the buyer chooses the most important legal issue only and devotes resources in this direction.

One of the basic principles of the sale of a business is the following - the seller is not responsible for any of the risks that have been adequately disclosed to the buyer. From this premise, follows the findings of this...