Due diligence is essential to all deal making to allow a party to make an informed decision as to whether it should enter into a transaction, and if so, on what terms. In a securities transaction, due diligence also ensures that public statements are not based on incorrect information and do not provide incomplete or misleading disclosure. When conducted effectively, due diligence can expose risks, which can then be used as bargaining points in negotiation of the terms of the agreement or as a basis for withdrawal from the deal. Failing to recognize these risks can cause significant problems for the buyer, ranging from an unfavorable business transaction to liability and damages.

The scope of a due diligence investigation is driven by the type of transaction, the parties involved, and the level of risk the client is willing to assume. Counsel must know what questions to ask and steps to follow to ensure favorable results for their client.

This Toolkit provides several continuously maintained resources for conducting various aspects of due diligence in securities offerings and mergers and acquisitions.