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Maria Jotautas: How to conduct due diligence?

  • Estonia
  • Other


Maria Jotautas has written an article about how to conduct due diligence. Why it is important and what is being checked during the process? Buyer's knowledge of the company based on reviewed documents and information received during the due diligence.

The seller must consider that the buyer is not obligated to check the company or the business share. The seller needs to prove that the buyer was aware of the deficiency before concluding the sales contract. Therefore it is in the interest of the seller to prove that the buyer checked the company and before the sales transaction the seller gave sufficient information to detect the deficiencies. However, the seller must calculate what information can be revealed to the buyer. The seller must take into account that the buyer may wish to lower the price of shares of the company, the buyer may be a competitor and if the buyer decides not to buy, he may use the received information. Confidentiality requirements should be established and the seller must find optimal solution how to systematize the information presented to the buyer.

The article is available in Estonian.