Unresolved Lawsuits: A Potential Issue During a Merger or Acquisition in New Port Richey

During the “due diligence” research stage of a merger/acquisition in New Port Richey, there are many potential issues to be aware of. If you’re planning on acquiring a smaller entity, you might want to pay particularly close attention to any financial issues that may diminish the at-face value of the entity. One example of such an issue is an unresolved lawsuit. How do you determine whether legal action is pending? Can an M&A lawyer help?

How Legal Due Diligence Can Help You Detect Pending Litigation

The good news is that pending litigation is relatively easy to detect due to the public nature of the legal system. All lawsuits go on public record, and your lawyer can search for pending litigation online. When approaching this undertaking, you might want to keep the statute of limitations for various actions in mind. The statute of limitations represents a legal time limit for claims against a company.

Once you are aware of the statutes of limitation of lawsuits that might affect a company, you can search for lawsuits filed against a company within that time period. There is not much point in searching for lawsuits beyond this timeframe, since they will have already been resolved. That being said, resolved cases might provide clues about the legal risks a company might face in the future, and this could be valuable information during due diligence.

In addition to searching public records, you might also want to directly request documentation of any pending litigation. Requesting this documentation directly could help establish a sense of trust and transparency during the business transaction. In contrast, parties may feel as though you are going behind their back if you search public records without first informing them.

Can Pending Litigation Be Hidden?

The public nature of the court system does not guarantee that pending litigation will be easy to find. Some legal issues could be hidden, including private negotiations for claims that have not yet been made public. This highlights the need to go deeper during due diligence and not simply rely on searching through public records.

For example, you might want to interview key personnel at the organization, including those who no longer work for the company. These individuals may be able to provide more insights about pending litigation, particularly if they no longer have any ties with the organization.

Not All Pending Litigation Is a Deal-Killer

With all that said, the mere existence of pending litigation is not necessarily a deal-killer. If the chances of a positive outcome are high, then you might have nothing to worry about. Of course, you might need to enlist the help of an experienced lawyer to assess the chances of success, especially if the case is heading to trial. Trials are inherently unpredictable.

Can an M&A Lawyer in New Port Richey Help Me?

A Business lawyer in New Port Richey may be able to assist with various undertakings, including due diligence. Even if you feel confident about the financial health of the entity you plan to acquire, some financial issues can be very difficult to detect at first. An experienced lawyer can help you dig deeper and uncover potential issues like unresolved lawsuits. Learn more by contacting Athanaselos & Associates, P.A. today.

Sources: 

floridabar.org/the-florida-bar-news/dilatory-tactics-and-lack-of-diligence-in-representation/

floridabar.org/the-florida-bar-news/be-a-diligent-lawyer/