Being diligent in offshore M&A – a buyer’s guide to due diligence in the BVI

Anyone familiar with the M&A arena will understand the critical role due diligence plays in the transaction. It allows the buyer to identify risks in the target business which may impact on the price, may identify items to be covered off through contractual provisions, and in some cases may lead to the buyer deciding not to proceed with the purchase at all.

The common law doctrine, caveat emptor (let the buyer beware) places the burden on a purchaser to reasonably examine property before making a purchase. This applies in relation to the sale of a company in the same way as buying a car, a boat or a house. Perhaps even more than with other assets, a company carries with it significant tail risks – you are unlikely to face significant legal liability for how the previous owners drove a car, but a buyer can face financial, legal and reputational risks based on how the sellers ran a business.

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