...It has rightly pointed out the benefits of due diligence and this fact cannot be over emphasized. According to Perry and Herd (2004) ‘Between recognizing the potential value or a merger or acquisition and achieving a new and fully integrated enterprise is a dangerous middle ground where anything can happen” It is because of this dangerous middle ground that many have advocated that due diligence should be given a second look. The issue is not the carrying out of due diligence but the efficiency and effectiveness of the exercise. Perry and Herd (2004) advocated three reasons for the increase in the dangerous middle ground, the reasons are cross-border transactions, increased expectations and difficulties in untangling companies that have entrenched behaviours. Engle (2011) warned that due diligence should not be undertaken when decision has already been made as to acquire or merge. According to him doing due diligence when agreement has been said is difficult because then the process is seen as one last hurdle in a long, painful process and the champagne is on ice. Due Diligence must be done before agreements are signed. Engle (2011) summarized the key aspect in the due diligence process incluedes (i) Careful planning (ii) Collection of information both within and outside the firm. (iii) Attaining a working knowledge of the organization in the following areas. (a) industry – nature of industry and who the key players and the cycle in the industry (b) financial condition...
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...Legal Due Diligence Legal Environment of Business / LAW 529 Maria Wood October 25, 2005 Memorandum DATE: October 23, 2005 TO: The COO of ABC venture capital firm FROM: Harichand Chandunair, Legal Expert SUBJECT: Legal Due Diligence I would like to thank the management for giving me the opportunity to study Joe’s landscaping and tree trimming business and make recommendation about the legal issues surrounding the business under consideration. Joe is very successful and has enough clients to keep him busy, along with at least 50 workers, working six days a week. Joe did not have a lot of money to start a commercial landscaping and tree trimming business, but he did it anyway. He started small, but has plans to expand his business. I would say Joe’s idea is excellent. He decided to start a business in Memphis where commercial landscaping and tree trimming business can flourish 8 months every year. “Location” is the key to a successful business. There are several legal and regulatory issues involved in the commercial landscaping and trimming business. Joe’s company is following the Environmental Protection Agency (EPA) requirements, Occupational Safety and Health Association Regulations (OSHA) etc. ABC venture capital firm is least likely to face any legal problems in those areas. It is seen that Joe sometimes fires minorities, women, protected class etc. without stating valid reason. This could result in costly lawsuits...
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...Ethical Dimensions of Business Week 3 - Discussion 2 - Environmental Liability and Due Process In 1979, Paul and John Reardon purchased 16 acres of land located next to a manufacturing plant in Massachusetts. In 1983, a state environmental agency, responding to a citizen's report, tested soil samples from both properties and discovered extremely high levels of polychlorinated biphenyls (PCBs) on the plant site and on the Reardons' property where it bordered the site. Shortly thereafter, the Environmental Protection Agency (EPA) cleaned up the contaminated areas. In 1985, the EPA notified the Reardons that they might be liable for clean-up costs. An EPA investigation of the property in 1987 revealed that some soil was still contaminated. This time, the Reardons cleaned up the property themselves. In March 1989, the EPA placed a lien for an unspecified amount on all of the Reardons' property to secure payment for any clean-up costs for which the Reardons might be liable. The EPA told the Reardons that they could settle the claims against them for $336,709 but noted that this amount did not limit the Reardon’s potential liability. The Reardons filed a motion for an injunction, arguing that filing a lien against their property without any prior notice or hearing violated their due process rights under the Fifth Amendment, which states that no person can be deprived of life, liberty, or property without due process of law. Superfund (the Comprehensive Environmental Response, Compensation...
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...new airline business. Bob has determined that he would require a loan of $300,000.00 to begin this venture. Bob plans to use the planes he intends to purchase as collateral for the loan. Joan researches Bob’s background and identifies that he has worked in the industry for 12 years and was able to show an increase in regional sales by 28%. Based on this research and Joan’s personal friendship with Bob, Joan recommends that ManBank provide the full loan amount. The loan is granted and Bob begins his business. Within 3 years, Bob’s business goes bankrupt and the bank is only able to recover one half of the loan amount upon the sale of Bob’s planes. The bank is now responsible for a debt of $150,000.00 that they will not be able to recover. Due to this debt, the shareholders of ManBank file a derivative lawsuit against Joan for breach of her fiduciary duty of care. The issue is to determine if Joan’s conduct is protected under the Business Judgment Rule (herein referred to as, BJR), thus, determining if Joan should be held liable for the company’s debt. As outlined in the NPC courseware, the Business Judgment Rule does not provide for a distinct definition. It is a principle that it utilized by the courts in multiple applications and translations. Essentially, the BJR is a corporate protection for directors and officers of a firm who act in good faith and make prudent decisions on behalf of such firm; whereby, these directors and officers can not be held liable by...
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...2 x 2 ID Picture 2 x 2 ID Picture ATTACHMENT A FEU CAVITE Department of Hotel & Restaurant/Tourism PERSONAL DATA FORM Name of students: | _____________________________________________ | Course/year/section | _____________________________________________ | Residence address of the students | _____________________________________________ | Parents/Guardians | _____________________________________________ | Landline Number/Cell number of parents or guardians | _____________________________________________ | Mobile number of Students: | ______________________________________________ | Email address of the students: | _______________________________________________ | Name of company/Host partner | _______________________________________________ | Address of company/host partner: | _______________________________________________ | Department in the company where student is assigned. | _______________________________________________ | Name of immediate supervisor in the department where the student is assigned: | _______________________________________________ | Contact number of Immediate supervisor: | ______________________________________________ | Name and telephone number of person to contact in case of Emergency: | ______________________________________________ | Signature of Students: ______________________________________________ 2 x 2 ID Picture 2 x 2 ID Picture ATTACHEMENT B FEU- CAVITE Department...
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...Act of 1996. It changed section of the CFA Act and also increased the penalties for selected crimes. 5. Which law was specifically created to deal with encryption policy in the United States? The Security and Freedom through Encryption Act of 1999. 6. What is privacy in an information security context? In the context of Information Security and as the text defines it, privacy is “state of being fee from unsanctioned intrusion.” 7. What is another name for the Kennedy-Kassebaum Act (1996), and why is it important to organizations that are not in the health care industry? The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is another name for The Kenndy-Kassebaum Act (1996). It is important to other organizations due to the fact that the act’s privacy standards could be applied to any organization. 8. If you work for a financial service organization such as a bank or credit union, which 1999 law affects your use of customer data? What other affects does it have? The Financial Services Modernization Act. Other effects that it contains are requiring notices to be...
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...scope. Verify the team’s assessment that the RFP is qualified for submitting a bid. Check that the due diligence is properly completed. Response Team Includes:IxD Director, Sales lead, Technical expert, Contract/legal team representative, Accounting representative, EVP and Stakeholders, Production Team, Project manager, Business analyst representative Qualify the Opportunity: Due to previous experience with seller, it is known that an easy partnership will be formed. Scope is clearly described with well defined and generous to deliver milestones deliverables Screen Buyer: The buyer contacted the seller ready to purchase. After meetings with seller’s production team members, SMEs, stakeholders, and project sponsor, It is clear they are in a position to move forward. ID Internal Requirements: Historically, working with the organization has proven to be beneficial both by building name recognition and financially. The buyers organizational goals align well with our organization. The key milestones and deliverable dates are very generous and we project the project could be done early then buyer is projecting. Buyer has stated they will provide all pre-production documentation as well as a producer for film days. Our production team will follow storyboards and producer’s direction. The production of these videos has full support from leadership in the organization. Due to the time sensitivity of this project start time, the contract team has been informed and are...
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...DUE DILIGENCE MEMORANDUM TO: JJJ Company FROM: Riordan Manufacturing DATE: September5, 2012 RE: JJJ Company to complete the Due Diligence to complete by- Setember5, 2012- For any transaction takes place. As a result to the investigation of the proposed acquisition, Riordan Manufacturing needs more information from the company to make a firm decision on behalf of the company. Please provide us with the information stated below. Please note this memorandum is designed so you can indicate your response on the form, in substantial time frame. Accordingly, please check all appropriate boxes to the right that apply to you as indicated in the request make sure to indicate whether the boxes is applicable or not applicable and relevant documents or explanation is enclosed. To make sure your response item satisfies the responses request in other items, please so states. Unless something else different is stated, please enclose all requested information for your company and all of its subsidiaries. Make sure that all documents are completed and sign on the last page as indicated in the request and return a copy with the memorandum to Riordan Manufacturing, along with the applicable documents. When sending the documents to the company makes sure to retain a copy to help facilitate the preparation of the schedules to the definitive purchase agreement. All information that is provided will be treated...
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...BASIC STEPS FOR ALL CLIENTS AND ENGAGEMENTS Practitioners should exercise due diligence in accepting all clients and engagements. Basic steps include: Evaluate prospective client integrity. Personally meet with prospective clients (senior management, owners, and/or directors for business clients). Ask for and follow up with references, including attorneys, bankers, other business consultants, and major vendors or customers. Verify that relationships were not terminated due to disagreements regarding business operations or outstanding invoices. For key executives of business clients (especially those not known by the CPA firm), ask for and follow up with personal references, including previous employers and business associates. Consider obtaining a credit history for individual tax and financial planning clients. If the prospective client is changing CPA firms, request permission to contact the predecessor firm to investigate issues such as the client’s consideration of advice provided, integrity, ethics, reasonableness of expectations, experience and qualifications of the staff, and business policies and procedures including cooperation, timing of the engagement, and whether the client pays bills on time. The previous CPA firm can provide only limited information unless it obtains an Internal Revenue Code Sec. 7216 disclosure statement from the client. Even so, the prospective client’s reaction to this request (and the response of the predecessor firm) may be indicative...
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...the types of business communication to use based on the accounting scenario. Since there was no collaboration by the learning team, this report is based solely on the opinion of one student. There are various factors that need to be considered when writing a business communique. The purpose, audience and leadership style are important considerations to be made when deciding on which type of communication to when reporting on the acquisition of a company. The first line of communication would need to be between the staff accountant and her accounting peers. The type of communication that would need to be used would be an interoffice memo. A memo would be an appropriate form of communication to advise the accounting department of the due diligence investigation. The memo can also be used to share with her peers the assignment and what needs to be done to complete the assignment. The interoffice memo is an ethical form of communication for this audience. The second line of communication would be between the staff accountant and the sales manager. The staff accountant is advising the sales manager of the results of the review of JJJ’s financial condition. An appropriate and ethical form of communication to use for this situation would be an email. The next line of communication would be between the accounting manager and the ad hoc committee. The accounting manager is reporting his recommendation not to move forward with the acquisition. The type of communication to use in...
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...DOCTORINE OF DUE DILIGENCE Introduction of Due Diligence: Due Diligence is a process of thorough and objective examination that is undertaken before corporate entities enter into major transactions such as mergers and acquisitions, issuing new stocks and other securities, project finance, securitization, etc. One of the key objectives of due diligence is to minimize, to the maximum extent practicable, the possibility of there being unknown liabilities or risks. The exercise is the multi-dimensional and involves investigation into the business, tax, financial, accounting and legal aspects of an issuer. Definition of Due Diligence: "Due diligence" is a term used for a number of concepts involving either an investigation of a business or person prior to signing a contract, or an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations. A common example of due diligence in various industries is the process through which a potential acquirer evaluates a target company or its assets for acquisition. * Due diligence can be defined as: 1. The examination of a potential target for merger, acquisition, privatization, or similar corporate finance transaction normally by a buyer. 2. A reasonable investigation focusing on material future matters. 3. An examination being achieved by asking certain key questions, including, how do we buy, how do we structure the acquisition, and how much do we...
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...Chapter 1 Course 7: Mergers & Acquisitions (Part 1) Prepared by: Matt H. Evans, CPA, CMA, CFM Basic Concepts Mergers and acquisitions represent the ultimate in change for a business. No other event is more difficult, challenging, or chaotic as a merger and acquisition. It is imperative that everyone involved in the process has a clear understanding of how the process works. Hopefully this short course will provide you with a better appreciation of what is involved. You might be asking yourself, why do I need to learn the merger and acquisition (M & A) process? Well for starters, mergers and acquisitions are now a normal way of life within the business world. In today's global, competitive environment, mergers are sometimes the only means for long-term survival. In other cases, such as Cisco Systems, mergers are a strategic component for generating long-term growth. Additionally, many entrepreneurs no longer build companies for the long-term; they build companies for the short-term, hoping to sell the company for huge profits. In her book The Art of Merger and Acquisition Integration, Alexandra Reed Lajoux puts it best: Virtually every major company in the United States today has experienced a major acquisition at some point in history. And at any given time, thousands of these companies are adjusting to post-merger reality. For example, so far in the decade of the 1990's (through June 1997), 96,020 companies have come under new ownership worldwide in deals worth a...
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...A Guide to Buying and Selling a Business Contents Introduction So where do I begin the process? Shares or Assets? How much is my business worth? Deal structure When do I have to pay? Where is the money coming from? Management Buy Outs and Management Buy Ins Do I need Heads of Agreement (“Heads”)? Take a good look at the target Share Purchase – The Legal Paperwork Asset Purchase – The Legal Paperwork Buying from an Administrator or Liquidator Completion Legal Costs 1. Introduction What follows is a brief overview of a complex legal area in which many traps and pitfalls await those unprepared. This guide outlines the main considerations that apply in buying or selling a business with practical advice based upon our own experiences of buying and selling numerous businesses for our clients over the years. There is no substitute for early, fast, pragmatic legal and other professional advice to guide you through the transaction whilst allowing you to remain focussed on the key management and operational decisions affecting the business. In our experience, every deal is unique. Steeles Law, Corporate and Commercial team Service, response times and business acumen are without fault Legal 500 2. So Where Do I Begin The Process? Proper legal advice is essential early in any major transaction for two key reasons: 1. to ensure...
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...Ethical and Legal Issues Merger of Company A & Company B Human Resources Management & Talent Development 07-04-13 Abstract In any merger, there are always legal and ethical issues involved. These issues have to be resolved in order to ensure a successful merger. It is the role of Human Resource personnel to ensure the code of ethics is used in legal and moral implications. The role of the Human resource manager is to create an ethical environment in which all employees are able to enjoy there inalienable rights. These rights will include the accessibility of information about the job, company, and there career and the right not to be coerced into situations. Maintaining these rights will help in reducing stress, establishing trust, increasing productivity and efficiency. This report will document the legal and ethical issues associated with a merger. It will also consist of a detailed implementation plan in resolving these potential ethical and legal issues. A plan for establishing an ethical work environment and resolving ethical and legal issues will be discussed as well. Identify Specific Legal and Ethical Issues involved in Mergers Recently the mergers and acquisitions of firms has become a major trend in business. In the process of mergers and acquisitions, the role of ethics and compliance has become a major step in ensuring success. A breakout session was held just recently on ethics and compliance in mergers and acquisitions. The panel, which featured...
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