Legal Due Diligence

A red-flag for the fast go/no-go decision, a full report for the final valuation and contract negotiations — the stage of the deal decides which. A red-flag report is a fast filter — it shows only the material risks and potential deal-breakers, ideal in competitive transactions where time matters.

A full report describes every area in detail — needed for valuation, for negotiating the representations and warranties, and for the lender. We often do it in two stages: a red-flag first, then depth where the red-flag flagged something.

To both — it is a negotiating decision, not an either/or. A defect can be settled by cutting the price, by shifting the risk to the seller through representations & warranties and an indemnity clause, by making closing conditional on the defect being cured (a condition precedent), or by insuring the deal (W&I).

As a rule of thumb: a certain, quantifiable risk usually goes into the price, and a contingent risk into an indemnity or warranties. Which route to take follows from how hard the defect is and how the balance of power sits in the negotiation.

In scope, and in what passes to the buyer. In a share deal you buy the company with its whole history — we examine it backwards (debts, disputes, tax, title to the shares). In an asset deal you buy selected components, but depending on what is acquired, succession mechanisms apply: the transfer of the workplace (art. 23¹ of the Labour Code), liability for the business's obligations (art. 554 of the Civil Code) and for specified tax arrears (art. 112 of the Tax Ordinance).

An asset deal also carries the risk that key contracts cannot be transferred without the other party's consent (an assignment ban). That is why the structure of the transaction sets the entire plan of the review — it is exactly where we begin.

Yes — vendor DD is a review you commission as the seller, before you put the company up for sale. It gives you control of the process: it lets you find and fix weak points early, and one report for all bidders speeds up the transaction and narrows the room to negotiate price.

Vendor DD is particularly worthwhile in auction processes and in a sale to a financial investor. It also tidies up the data room, so the buyer gets an ordered picture rather than a chaos of documents.

Above all, legal title: the state of the land and mortgage register, the ownership–perpetual-usufruct distinction, and encumbrances. We check mortgages, easements, lease and tenancy, pre-emption rights, zoning under the local plan or a planning decision, and environmental matters (historic soil contamination).

Separately — especially in Warsaw — we assess the risk of restitution claims to properties affected by post-war nationalisation decrees and the compliance of the buildings with permits. For a company that comes with real estate, we run this workstream in parallel with the corporate review.

At the structural level, yes; full tax due diligence is run by a tax adviser, usually in parallel. We point out the tax consequences of the chosen structure (a share deal — as a rule 1% PCC; a sale of a business or an organised part of it: outside VAT, but subject to PCC) and — when acquiring an enterprise or an organised part of it — the buyer's liability for specified tax arrears (art. 112 of the Tax Ordinance).

From 2026 we add the target's exposure to mandatory KSeF to the review: whether it has rolled out e-invoicing and whether its processes are compliant. That is no longer a future risk but a real checkpoint.

We check this in every DD, because such a clearance can be a condition of closing — whether it applies depends on the turnover thresholds and the target's profile. A merger notification to the President of UOKiK may be required where the deal is a concentration and the thresholds are crossed: as a rule EUR 1 billion of worldwide turnover or EUR 50 million in Poland, absent a statutory exclusion.

Separately, an acquisition of a strategic company by an investor from outside the EU, EEA or OECD may need clearance under investment screening — run since 24 July 2025 by the minister responsible for the economy, not UOKiK. Large deals involving non-EU subsidies may be notifiable to the Commission (FSR).

We work in a virtual data room (VDR) — a secured platform where the seller makes the target's documents available. We review them against the agreed scope and put questions in a structured Q&A list.

You get the result in a red-flag or a full-report format. At the outset we set the scope, the materiality thresholds and the timetable, so you know from the start what you will get and when.

In its purpose and its audience. Transactional DD is done for a specific transaction, from the perspective of the buying, selling or financing party — what counts are the risks that affect the decision, the price and the contract.

A preventive legal health check is commissioned by a company on itself, with no transaction, to order its risks calmly. A compliance audit, in turn, checks conformity with specific regimes (GDPR, AML, ESG) on an ongoing basis. These are three different tools.

No — and no honest DD promises that. DD is a picture of the risks at a given moment, based on the documents and information the seller makes available; it does not replace a forensic audit.

That is why we translate the findings into contractual mechanisms that protect you against what DD could not detect: representations & warranties, indemnities and — increasingly — a W&I policy.

Usually not entirely — W&I shifts the financial risk of a warranty breach to the insurer, but the warranty package and its scope still normally get negotiated. W&I insurance (of representations and warranties) lets the seller make a cleaner exit and gives you a real source of recovery for claims.

W&I does not replace DD, though — the insurer requires a thorough review as a condition of cover and excludes known and disclosed risks (which go into an indemnity). So the review and the policy work together, not as substitutes.

Usually after the letter of intent (LOI) is signed and access to the data room is granted, before the final agreement. DD supplies the ammunition for the price and contract negotiation, so the sooner we agree the scope, the fewer surprises at the end.

The timetable is affected most by regulatory clearances — merger control at UOKiK, investment screening, FSR — because they can stretch the road to closing. That is why we identify them as early as possible.