Today's article examines the features of due diligence in the context of private M&A in Finland.
Who can do due diligence in Finland?
If you are planning to acquire a company in Finland, then you should know about the local practice of conducting due diligence by specialists from the respective divisions of the company.
The advantages of this approach:
- cost reduction;
- own experts have deep professional knowledge in the field of the company's activities;
- the ability to see the business "from the inside" and more accurately formulate possible risks and recommendations for their elimination.
The disadvantages of not using external consultants when conducting due diligence are:
- distracting employees from operational tasks;
- the possibility of performing due diligence independently only when acquiring a business in a similar field of activity;
- risk of bias towards facts.
Conducting DueD on your own is advisable only in small companies since a comprehensive analysis of a large business requires not only highly qualified specialists but also a lot of time.
Due diligence and information disclosure
Due diligence in Finland and other countries varies depending on the type of transaction and the industry in which the target operates.
Due diligence usually covers commercial, legal, financial, and tax issues. An environmental audit can also be carried out by an appropriate consultant, if necessary.
Publicly available information
The due diligence of a company in Finland includes analysis of documents stored in the virtual data room (VDR), interviews with management, and searches for publicly available information.
Publicly available information typically includes:
- company charter;
- extract from the commercial register;
- statement on business mortgages;
- annual accounts of a company registered in Finland.
It is also worth noting that since last year already, Finnish enterprises are required to maintain an updated register of beneficial owners and register them in the commercial register. This data is open and publicly available.
Disclosure and liability
If you are planning to conduct a merger in Finland, it is still worth considering that in some circumstances a party may be held liable by providing false information or deliberately hiding information that is material to a potential buyer. The requirement for a fairly extensive disclosure is governed by the Finnish Goods Sales Act and the Real Estate Code.
The due diligence procedure is a very complex and responsible event that affects the development prospects of the client company, its business reputation and financial well-being. For due diligence, three groups of specialists are often involved: financial analysts; auditors; lawyers. It is worth clarifying that these are obligatory participants in the procedure, but other experts can be invited to the working group as an option.
Businessmen who have decided to conclude a merger deal in Europe should take a responsible approach to the issue of legal due diligence of the object of purchase. To do this, you can contact the experienced legal professionals of our company, who can provide the necessary accompanying services during the due diligence process of the Finnish company. We also invite you to a one-on-one consultation on M&A regulation in Finland. For more information, please fill out the quick contact form.