Due diligence is a crucial step in any business acquisition process. What is the paralegal’s role when it comes time to carry out this exercise?
Due diligence is a very important phase when buying a business. It is the opportunity to verify the future acquisition’s state of health and thus avoid being confronted with unpleasant surprises after the transaction has been concluded. When an entrepreneur employs a law firm to carry out his acquisition, due diligence is the mission entrusted to business law paralegals. “It’s a truly interesting task,” confides Catherine Vaillancourt, senior paralegal in the business law department at Langlois, a Montreal law firm. Due diligence includes many aspects, such as human resources, real estate, finance, corporate… Each case is different, which makes this part of the job exciting.”
Attention to detail
In due diligence, everything must be verified – the exercise does not only relate to the accounting and legal aspect but also covers the company’s financial results, the tax aspect, its order book, relations with suppliers, human resources, employees’ working condition… In short, it is a heavy task that requires good organization and attention to detail.
“Even before beginning due diligence, it is essential for the paralegal to have a good understanding of the ins and outs of the file,” advises Catherine Vaillancourt. “He must sit down with the lawyer and get all the information given to him to get an overall view of the situation. He thus ensures that no aspect of the file will be overlooked in the verification.”
Due diligence is a complex and laborious exercise for paralegals. Catherine Vaillancourt emphasizes that this work requires zeal. “You have to take the time to properly validate all the information that has been discovered,” she says. “Read all the reports and when you are less familiar with some of the results you should not hesitate to ask questions to understand them. Certain information can seem harmless at first sight but can in fact be important.”
Due diligence takes time and thoroughness. It is a task that Catherine Vaillancourt loves to accomplish. “Business law is an exciting and varied field,” she says. “And due diligence is fascinating because of its diversity!”