Mergers and acquisitions can be transformative opportunities for businesses, but they also come with significant legal and financial risks. Before any deal is signed, it’s crucial to conduct thorough due diligence to avoid costly surprises. At Harrington Morris Legal, we’ve represented both acquirers and targets across dozens of industries, and we’ve learned where the most common pitfalls lie.
The first and most obvious step is to verify the legal status of the target entity. This means confirming business registrations, licensing, intellectual property ownership, and ongoing litigation. It’s not uncommon for businesses to operate in multiple jurisdictions, which complicates the verification process and may require coordination across state or national boundaries.
Next, review all material contracts. These include customer agreements, vendor contracts, employment arrangements, and debt instruments. Look for clauses that may be triggered by a change in ownership, such as termination rights, consent requirements, or non-compete limitations. Missed obligations in these agreements can dramatically alter the value of the deal.
Employment liabilities are another area of concern. Analyze compensation structures, pending employment claims, and union agreements, if applicable. Regulatory compliance also needs careful attention—especially in industries like healthcare, fintech, and environmental services where penalties for oversight can be substantial.
In recent years, acquirers are paying greater attention to cultural compatibility and ESG (Environmental, Social, Governance) metrics. While these may seem soft on the surface, misalignment here often results in failed integrations and talent attrition.
Your legal team must also advise on transaction structure. Is this an asset sale or stock sale? Will you need to file for antitrust clearance or foreign investment review? These structural decisions impact taxes, liabilities, and closing timelines.
Harrington Morris Legal offers comprehensive legal support throughout the M&A lifecycle. From letters of intent through post-close integration, we help clients negotiate, document, and close deals efficiently and confidently. Let us help make your next acquisition a strategic success, not a legal headache.