DUE DILIGENCE LAWYER
Providing important due diligence support and direction to banks and financiers looking to advance financing.
The due diligence review must be at the core of any financing. For without an appropriate investigation of the prospective debtor, who is seeking to loan your money, you can pretty much kiss that money goodbye. Financing requires the backing of adequate security, combined with a viable business plan that is highly capable of achieving its target objective. These dual aspects must not merely be in place, but they must be sufficiently strong such that you are confident to that you will realize upon your investment in the debtor.
Investigation of Available Security
The first step in due diligence is to insure there is appropriate and available to security to back-up the loan that is being put forth. It is critical that there is value behind the debtor, such that if their investment plans go south, the bank/financier is able to collect on their extension of credit. This is the cornerstone of any effective financing program. For without the fall-back of adequate security, there is no insurance against the recovery of the debt.
Unfortunately, being capable of realizing on available security (if it has deteoriated and lost significant value), should not be your objective goal as a financier. You want to be realizing on the financial investment that you have made, and its only possible if the debtor is capable of realizing on the business plan that they have put forth.
Analysis of Business Plan
Due diligence cannot be limited to what presently exists, but must also include an analysis of what is to potentially arise. Such an investigation begins with a review of the proposed business plan and thereupon the capacity to realize upon the target goals. The capacity to achieve those targets needs to be measured against adversity and other negative factors that could potential destabalize and/or derail the business plan from being realized. Such an analysis must be undertaken fom a critical standpoint, such that the optimism that is evident in every party seeking financing is brought to reality.
Working with capable legal counsel, it is possible to get a better understanding of the challenges arising in the due diligence process and engage a structured approach to help counter a negative turn of events. Such situations are all too common not to take appropriate legal precautions and it is our role at Neufeld Legal P.C. to assist in protecting your advancement of finances.
For knowledgeable and experienced legal representation with respect to the provision of business financing, contact corporate finance lawyer Christopher R. Neufeld of Neufeld Legal P.C. at 403-400-4092 / 416-887-9702 or via email at Neufeld@FinancingLawyer.ca.
Financing Lawyer Christopher R. Neufeld is a corporate commercial solicitor with the law firm of Neufeld Legal P.C. and is admitted to practice law in Alberta and Ontario (Canada) and New York (U.S.A.). Our legal practice focuses primarily on business law, in particular corporate commercial transactions and their dependence on commercial financing. The law firm's offices are situated at 144 - 4th Avenue SW, Suite 1600, Calgary, Alberta T2P 3N4; 1 Yonge Street, Suite 1801, Toronto, Ontario M5E 1W7; and 719 Catalina Crescent, Burlington, Ontario L7L 5B9. Contacting us does not create an attorney-client relationship. COPYRIGHT 2010-11.