What a buyer's or investor's lawyers review before a transaction – title to the shares, the company's contracts, disputes, licences, IP and employees – as a numbered checklist.
Legal due diligence answers a narrow but critical set of questions: does the seller actually own what it is selling, is the company properly constituted and authorised, which contracts and liabilities come with it, and will the transaction itself trigger consents, termination rights or filings? The output is usually a legal due diligence report with a red-flag summary, which then drives the warranties, indemnities, conditions and price adjustments in the purchase agreement.
The folders below follow the order in which lawyers typically review a target. Corporate records come first because everything else depends on them: if the cap table is wrong, every other analysis is built on sand. Contracts and change-of-control come next, because they decide what the buyer is really acquiring. The numbering continues the corporate / legal / IP structure of a standard data room index, so you can merge it with the financial and tax lists without renumbering.
Numbered like a data room index: use the sections as folders and keep the numbers in file names.
The CSV opens in Excel, Numbers or Google Sheets. A practical starting point – adapt it to your deal and jurisdiction with your advisers.
The buyer's or lead investor's external law firm, often with local counsel in each country where the target has subsidiaries, and specialists for regulatory, IP, employment and data protection.
Usually runs in parallel with financial due diligence over 3–8 weeks; a red-flag report may be delivered first, with the full report before signing.
Corporate records and title to shares, material contracts, litigation, regulatory compliance and licences, intellectual property, employment, real estate and data protection. It identifies risks to be dealt with by price, warranties, indemnities or conditions to closing.
A short report that lists only material issues, as opposed to a full descriptive report on every contract. Buyers often request one first to decide whether to continue the deal.
Legal due diligence looks at rights and obligations – who owns what, what the company has promised and who can sue it. Financial due diligence tests the numbers: earnings quality, working capital and net debt.
Typically contracts above a value threshold agreed with the buyer, contracts with change-of-control or exclusivity clauses, and any contract that is hard to replace, such as key customers, suppliers, licences and financing.
Yes. Commercially sensitive contracts are often redacted or opened only to the buyer's external lawyers ("clean team") until late in the process. A data room with per-folder permissions and watermarks handles this.