Due Diligence, Legal and Employment Audit

• Executive Summary:

The Firm completed its review of the Attachments as per Section VI pursuant to the methodology set forth in Section IV(b) and subject to the limitations, scope and purposes set forth in Section IV(a).  The Firm made the factual determinations and assumptions set out in Section III.  Upon completion of its review, the Firm has identified and categorized the potential risks listed below in Section II for further discussion.

• Identified Risks and Recommendations:
  • Listed:
  • Corporate
  • Financial
  • Compliance, Litigation, Claims and Disputes
  • Intellectual Property
  • Human Resources and Employment
  • Operations and Business Model
  • Environmental, Health and Safety
  • Real Estate, Inventory and Physical Assets
  • Insurance
  • Marketing and Sales
  • Strategic Plans and Forecasts
  • Confidentiality and Disclosures
  • Miscellaneous Information
  • Ranked:

  Risk/Recommendation Urgency Importance Risk Level

  • Definitions:
    • Urgency – how quickly we believe this recommendation should be implemented to address ongoing risks in the business (not necessarily related to the sale).  Risks that are more urgent are considered to be those that may significantly impact the business under current ownership.
    • Importance – how important we believe this recommendation is to complete prior to taking it to market for sale.  The more important a risk/recommendation is, the more we believe that it is one that would or could affect a transaction (i.e. cause a buyer to demand additional protections or a price adjustment).
    • Risk level – how large the risk is if realized.  The higher the risk level, the more significant threat it poses to the business.
    • High – this is the most urgent, important and risky category of the analysis and represents a matter that should be addressed immediately within the first 90 days
    • Medium – this is a mid-level risk that has some level of urgency, importance or significance but is not out of the ordinary for this type of business.  It should be dealt with in the near/medium term once higher-level risks are addressed.
    • Low – this is a risk that has been identified but can likely be addressed once the more urgent, important or higher-level matters are addressed in the due course of improving the business and preparing it for a sale.
  • Assumptions and Factual Background Summary:
  • Full Analysis and Discussion:
  • Introduction, Scope, Purpose and Limitations

  The purpose of this legal analysis is to identify, discover and create a plan of action for de-risking the Company prior to an anticipated sale or other ownership transfer.

  The analysis and summary contained herein is based on a review of the documents and survey answers provided by the Company, owners and/or its representatives contained herein and within the attachments.  The Firm has relied upon these answers and documents to reach the conclusions and advise stated herein and any errors, omissions or inaccuracies within such responses and documents may lead to improper or incorrect conclusions.

  As an initial plan of action, this document should be revisited and updated as the Company and its representatives address, execute and continue to discover additional, supplementary or even contrary information through further meetings, discussions, analysis and review.  This document is not intended to address or discover each and every possible issue and Company acknowledges that further due diligence and actions are required.

  Further, each prospective buyer of the Company may have different levels of comfort with various risks, different goals and motivations and levels of due diligence.  This analysis is not intended to address each and every matter that may possibly cause an issue during the due diligence process.  This document is not intended to discover or resolve the entire scope of possible issues.  Rather, it is intended simply as a first step in doing so.

  Finally, the Company recognizes that it may have various contracts, obligations or other matters that would encompass laws and regulations of multiple jurisdictions and related to a multitude of complex, technical and varied subject matters.  This document is not intended to be and does not constitute legal advice and should not be relied upon as legal advice. Rather, it is intended to be exit planning consulting advice that is focused on discovering potential legal and due diligence areas to de-risk the Company prior to an anticipated sale and to create awareness for the Company to be able to identify and address potential concerns.

  • Methodology

  To complete this assessment, the Firm reviewed the Company’s assessment responses and documents attached hereto and incorporated here as Exhibits, referenced in Section VI Attachments.  These matters were reviewed for completeness, accuracy and potential risks that the authors believe that buyers and standard business operators would likely create concerns when compared to best practices standards as well as the Company’s individual situation in multiple areas.

  • Analysis:
    • Corporate
    • Financial
    • Compliance, Litigation, Claims and Disputes
    • Intellectual Property
    • Human Resources and Employment
    • Operations and Business Model
    • Environmental, Health and Safety
    • viii.Real Estate, Inventory and Physical Assets
    • Insurance
    • Marketing and Sales
    • Strategic Plans and Forecasts
    • Confidentiality and Disclosures
    • xiii.Miscellaneous Information
  • Conclusion:

  The Company has various legal needs, each with varying corresponding levels of urgency, importance and risk to be addressed prior to a potential sale of the Company.  These risks are set out in summarized detail in Section II.

  • Attachments
    • Due Diligence Corporate Information Questionnaire
    • Company Provided Documents