DUE DILIGENCE SERVICES

Dilendorf Law Firm offers comprehensive legal due diligence services to our clients contemplating investments into a variety of investment vehicles, including startups, emerging and established companies, private equity funds, venture capital funds, hedge funds, cryptocurrency funds and tokenized funds.

Whether one plans to make an investment into a fresh startup, established hedge fund or a sophisticated M&A transaction, prospective investors must conduct a thorough due diligence to make sure their investment decision is informed and to ensure that all risks are disclosed.

At the basic level, legal due diligence and background checks are aimed to ensure that the entity is duly formed and in good standing, with sound corporate governance and capitalization in place.

Due diligence ensures that the managers, shareholders and sponsors are not red-flagged and are legally authorized to enter into the investment transaction. In addition, a thorough legal due diligence may reveal previously undisclosed risks and liabilities, including contractual, compliance, employment, intellectual property, tax and litigation issues.

Our legal due diligence services include:

• Preparation of a customized due diligence checklist;
• Background checks of the management, sponsors and shareholders: including running them through multiple high-risk databases (OFAC sanctions list, politically exposed persons (PEP) list, global watchlists, etc.);
• Review of the essential corporate documentation (fund offering documents, company articles of incorporation, bylaws, minutes of director and stockholder meetings, partnership agreements, shareholder agreements, capitalization tables, etc.);
• Review of material contracts with partners, management, employees, previous investors, lenders and service providers;
• Review of IP rights;
• Regulatory compliance review, including licensing, registrations, compliance policies, SEC Form D filings and “blue sky” state filings;
• Other red flags, including industry misconduct.

This list is not exhaustive and some items may or may not be required depending on a transaction.

Resources:

• Red Flags of Investment Fraud Checklist – Investor.gov
• Investor Alert: Bitcoin and Other Virtual Currency-related Investment – SEC
• Investment Adviser Due Diligence Processes For Selecting Alternative Investments and Their Respective Managers – SEC
• Researching Investments – Investor.gov
• Investor Education Quiz – NY Attorney General
• How Investors Evaluate a Company – Yale University
• Reputational and Integrity Due Diligence on Investors – Columbia Law School