The Due Diligence process may also be carried out when the company decides to grow, as it points out flaws and can present an assessment concerning risks and opportunities.

Increasingly common in business relationships, due diligence is the preliminary review of documents and information conducted by experts when mergers, acquisitions, or even partnerships between companies take place.

Previously reserved for large transactions, Due Diligence is becoming increasingly common, including in less complex transactions. “No one should do business blindfolded when it is possible to reduce risks, especially in relation to the companies’ financial status,” says Andressa Lago, Manager of the Paralegal area of the PLBrasil Group, which specializes in incorporation services and licenses and registrations rectification for companies.

In summary, Due Diligence analyzes corporate documents from the financial, accounting, and legal areas, as well as the incorporation documents, with the purpose of verifying whether the companies involved are in compliance (in the case of a merger or partnership) or whether the acquired company is in compliance. “If any issues are found, such as labor lawsuits and expired documents, the opposing party decides whether it is worth moving forward with the negotiations,” says the expert.

Due diligence, however, is not used only in the cases mentioned. It can be conducted as a kind of audit when a company wants to understand its current situation. “When a company wants to expand, it conducts due diligence, which identifies weaknesses so that improvements can be made. In addition, this process allows for an assessment of risks and opportunities,” he says.

Andressa Lago recommends that due diligence be conducted from time to time. “This document review can be conducted whenever the company wishes to maintain control over its compliance,” she concludes.