The due diligence process consists in the investigation of an asset, business, investment or other, to determine or confirm its status or condition. Generally, the term "due diligence" is used and emphasized in the context of mergers and acquisitions processes as part of the administrative, financial and legal strategy to learn all the relevant aspects of the past, present and future predictable of the company, business or asset to be acquired. The process of this investigation varies according to the type of good or business in question, the stage in which it is carried out, objectives sought, among others. It should be noted that a company, business or asset may also be subject to the due diligence process prior to its sale, as a preparatory phase to the process of enabling a platform to access its information, or to know in detail its current status as part of the valuation process. On the other hand, a due diligence can also be useful for companies or businesses in operation to know and/or have a diagnosis of their current situation.

In M&A processes, this research or investigation is of great importance and relevance since the result of such research can determine the acquisition price and contingencies that may arise from the business; so, it becomes vital that the process is carried out with detail and diligence.

The result of the due diligence will also depend widely on how much the seller discloses the information of the company, business or asset, since it is clear that getting to know everything about an asset or a business is very complex, so it is necessary to try to obtain as much knowledge as possible to quantify and minimize the risks at an appropriate level so that the interested party can make accurate and informed decisions that may influence factors such as the purchase price of the company, business or asset, provisions regarding indemnity clauses, among others.

Many parties can participate in a due diligence process, among which we can mention the following: the seller, who is the one who usually provides the information that will be the subject of the investigation; the buyer, who receives the information provided; the administrator of the virtual or physical platform (data room) where the documentation will be provided, who is usually the same seller or a third party, and both financial and legal advisors.

These processes require essential coordination and organization due to the amount of documentation that could be provided. Therefore, virtual platforms are usually used to provide this information to potential stakeholders, in addition to the confidentiality that these media provide. The administrator oversees the users who enter it, giving them access with security passwords, and also having the power to block certain elements to users, such as access to specific information, print blocking, among others. Notwithstanding the above, there are those who prefer to perform the due diligence through a physical review, i.e. by enabling an office or access room in which copies of the documentation that will be made available to the interested party are enabled. In these cases, as in the case of a virtual platform, the documentation must be in order, clearly identified, and can even monitor the files that are provided and who accesses them for review.

The duration of the due diligence process is elementary as the buyer will press to obtain the results or conclusions of the review carried out as soon as possible, in order to make a correct decision regarding the purchase of the company, business or asset. Therefore, it is advisable to prepare and elaborate progress reports, anticipating to the client the relevant findings and risks that have been managed to be identified from time to time during the process until reaching the final report that will contain the detail of the findings.

Generally, the most relevant areas that are included in a legal due diligence process are: corporate aspects, labor, tax, environmental aspects, relevant aspects of the market (commercial or regulatory), intellectual property, real estate, insurance, debts/credits, litigation, among others. In the case of acquisition of businesses and companies the approach of due diligence will also depend on the sector in which they operate, i.e. whether it is a regulated sector or not.

The process finalizes with the delivery and/or presentation of the legal due diligence report to the interested party, who is usually the buyer. Such report may be in various formats, at the customer's expense, that may require more detailed versions, or, on the other hand, executive or summary versions. In any case, the report should contain the details of the contingencies and/or findings identified during the process. All this information should be able to provide a legal x-ray of the business, company or asset situation, being then a tool to estimate the contingencies and findings of this, and as mentioned above to formulate appropriate decisions.

As it can be observed, a due diligence process is of great importance when making an acquisition or purchase of a business, company or asset and must be done with objectivity, responsibility and organization to ensure the best result.