Legal Due Diligence --The Skeletons In The Closet (e37e583c-5d9d-49db-b964-f1ef042939a3)

A crucial step in the acquisition by one company of the assets of another, the acquisition of the stock of another company, or the merger of two com-ponies, is the legal due diligence which needs to be performed in order for the acquirer to ascertain or confirm the obligations, liabilities and exposures to risk that are being assumed along with the assets or corporate stock being acquired. Where the obligations, liabilities, or exposures to risk arise from existing contracts, or from pending lawsuits, administrative proceedings, or threats of these actions, those matters are relatively straightforward to discover by careful review of the files of the party whose assets or stock is being acquired. However, where a company is engaged in ongoing mining or processing operations and has operated or owned mining proper-. ties, there are many sources of liability and exposure to risk which could have major adverse economic consequences to the acquiring party and which are not revealed, or at least are not clearly delineated, by the records of the company whose stock or assets are being acquired.