Paris—Dentons Paris M&A Partner Jean-Marc Grosperrin discussed the importance of M&A due diligence, now an integral part of corporate transactions as enforcement efforts increase, in the May “Legal Focus” section of Lawyer Monthly.

Companies failing to carry out extensive due diligence in M&A transactions reveal a lack of knowledge of the target company and liability issues, depending on the strengths of the parties.  Its scope may vary depending on the structure of the deal. Foreign companies carrying out due diligence need to consider the corporate framework, labor law and regulatory obligations.

The due diligence process has become much more efficient in recent years through the use of virtual data rooms. Additional changes in M&A due diligence generally arise from evolving labor matters, such as the recent “Florange law” imposing a 3-month time frame to sell a company. The process also may vary depending on whether it is a share deal or an asset deal.  Jean-Marc feels that any legislative change which would favor foreign investment, such as tax advantages, would be welcome.

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