The first step in investment acquisition, preliminary legal due diligence that companies about to secure investment must know.

Law firm Veat received a request from company A, a next-generation artificial intelligence semiconductor company (hereinafter referred to as "the client"), and conducted a preliminary legal due diligence.

The client sought out Law firm Veat, specializing in investment and M&A, to proactively identify and prepare for potential legal issues that may arise during future investment rounds.

Law firm Veat's investment lawyers objectively assessed the startup's current status through preliminary legal due diligence and presented necessary measures, meticulously analyzing the client's current legal issues and suggesting necessary actions.

Importance and Necessity of Preliminary Legal Due Diligence

Preliminary legal due diligence (Due Diligence) is a process where investors thoroughly review the legal situation of a target company before a significant business transaction, such as fundraising, mergers and acquisitions (M&A), or joint ventures, to identify risks, and becomes an important decision-making criterion for both investors and the companies receiving investment.

While preliminary legal due diligence is not significantly different from the process and methods used by investors conducting due diligence, it is an essential procedure for rapidly growing companies, such as startups. Startups often experience legal issues that are easily overlooked during the process of expanding their business through innovative business models.

The advantage of conducting preliminary legal due diligence is that it allows you to resolve any legal shortcomings in advance. This eliminates potential delays that may occur during the investor's due diligence stage, builds trust between investors and allows the process to be more rapid and efficient.

From the investor’s perspective, it is necessary to comprehensively confirm whether the company receiving investment is operating legally and whether there is a future legal risk. It may be difficult to make an investment decision if the legal risk is deemed large. At this time, the company receiving investment can obtain an opportunity to resolve issues in advance by conducting preliminary legal due diligence through lawyers who have handled numerous investment matters, allowing both parties to proceed with a satisfactory investment process.

Law firm Veat has proven its exceptional expertise in investment and M&A, having achieved the result of securing a place among the TOP5 in the M&A market for the first half of 2024 based on the number of transactions in the Bloomberg League Table. It provides various investment and M&A legal advice, such as large-scale deals, small and medium-sized M&A, fundraising, joint ventures for startups and venture capital (VC), based on extensive investment and M&A advisory experience.

If you need legal advice related to preliminary legal due diligence, startup investment, and M&A, please contact Law firm Veat, specializing in investment and M&A.

Thank you.

Law firm Veat