Richard A. Kranitz, experienced
Business Attorney, stresses the importance of
conducting a thorough Due Diligence prior to Business Acquisition
“Conducting a thorough due diligence
before business acquisition is critical to a successful and smooth acquisition
process”, says veteran attorney Richard A. Kranitz. Some of the obvious areas of diligence would
include existing contracts, payroll history, retirement account liabilities,
and overview of assets and liabilities.
While most would-be business owners would understand the need for
examining these basic, but critical, information, a more thorough review and
analysis may be appropriate in certain circumstances.
One such example would be
acquisition of a business in a different state or even business with an overseas
presence. With exposure to different
regulatory requirements in a new jurisdiction, the acquiring business would
have to accurately assess its new obligations and exposures. For example, a company dealing with sensitive
consumer data would be subject to varying types of regulatory requirements in whatever
state they do business in. If such a
business were to acquire another business in a different state, they would have
to conduct a review to ensure that their existing compliance scheme meets the
requirements of the new jurisdiction.
Even more complicated, if the acquiring business is new to handling
sensitive consumer data, they may have to review the compliance scheme from
scratch or build one from the ground up.
Overseas acquisition could be even
more complex. For example, the European
Union has enacted General Data Protection Regulation (“GDPR”). GDPR is widely considered one of the most
sweeping and expansive data protection laws anywhere in the world. Any acquisition of business potentially
subject to GDPR would require an extensive review of data handling protocol to
ensure compliance with the breadth and scope of GDPR.
While many acquisition due diligences
focus on financial health and potential liability exposure of the acquired
business, experienced attorneys will examine all relevant issues, including,
but not limited to, regulatory concerns and multi-jurisdictional
dimensions. Thorough due diligence is
critical to ensure that all potential issues and pitfalls are examined prior to
the deal being completed and that post-acquisition operation is smooth and free
of unanticipated surprises.
*** Richard Kranitz (Wisconsin) is an experienced attorney and business consultant in the areas of corporate, securities and tax planning for corporations, partnerships, joint ventures, limited liability companies, multi-unit enterprises, and a variety of different non-profit entities. In addition, he has counseled their owners and executives in compensation planning, estate plans, and asset protection. Attorney profile at: https://solomonlawguild.com/richard-a-kranitz-esq
