Due diligence

Every investment into a company, purchase of a software code or a license and every signature of a long-term business cooperation contract contains specific circumstances of a transaction. These circumstances have to be reflected in due diligence whose purpose is to identify risks related to the transaction for the investor or buyer. Such risks are significantly reduced with a systematic and thorough due diligence process, tailored to an individual transaction.


Due diligence can be carried out as partial (legal, commercial, operative or technological) or comprehensive due diligence. When conducting due diligence, cooperation of multiple relevant experts is required. Due diligence is concluded with the preparation of a “due diligence report”, which includes accurate summaries of the due diligence in particular areas, detailed description of risks and recommendations.

Legal due diligence

Legal due diligence is the procedure of acquiring, checking and analysing information which influence legal risks related to the transaction at hand. Information is collected from the company’s documents of incorporation, valid contracts, registers of movable and real estate property, valid unilateral declarations, decisions of administrative authorities, etc.


Legal risks exist in the company’s corporate structure, assets, (non)registered intellectual property rights, contracts with employees and external contractors, outstanding lawsuits against the company, regulator’s administrative procedures against the company, company’s past transactions and the past behavior of the company’s management.


By investing into a company or purchasing its assets, an investor or buyer partially or fully enters into a position of a legal successor. Thus, it is even more important to initially familiarize oneself with the company’s legal situation and all of its legal risks. In most cases of purchasing a company’s assets, there is no legal succession, which means that the risks for the buyer are lower and that due diligence is less detailed.

The following matters are included into the framework of due diligence:


  • Company information: incorporation, corporate governance, related entities

  • Shareholder information: list of owners, inputs, valid contracts related to disposal of shares, information about the capital

  • Intellectual property rights: list, ownership, contractual clauses with developers, existing disputes

  • Contracts and commitments: binding contracts, non-binding legal acts, financing agreements

  • Employees and consultants: employment contracts, services agreements, employment disputes

  • Pending legal and administrative procedures: lawsuits status, regulatory procedures

  • Insurance: liability insurance, insurance for "cyber" risks

  • Specific questions for the company: past transactions, fit&proper assessment of the company’s management

  • Material disclosures.


The goal of legal due diligence for the client is to:


  • Identify and define all legal risks

  • Find solutions or alternatives to reduce or eliminate legal risks

  • Gain a complete understanding of the company's contractual obligations

  • Identify insurmountable legal barriers (“deal breakers”).


Within the framework of legal due diligence, relevant documentation is reviewed, a questionnaire is prepared and interviews with relevant employees are carried out. Legal due diligence is concluded with a “legal due diligence report.” The report consists of a summary of the company’s legal status, description of individual legal risks, recommendations of solutions to reduce or eliminate these risks and a summary of findings. Findings in this document represent the basis for a contract that seeks to execute the transaction. Most often, the findings from legal due diligence are reflected in the form of guarantees and corporate commitments vis-à-vis the investor or the buyer.

Tech due diligence

Technological due diligence is conducted in cases of purchasing software code or investment in a company where the software code or other technology represents an important (often the only) asset of the company (hereinbelow referred to as “technological solution”).

The object of the technological due diligence is:


  • Architecture and infrastructure of the technological solution: precise description of technology, which includes filing all relevant documentation (architecture description, API documentation), indication of the programming language, description of databases, description and indication of servers, performance indicators (test results), provision of scalability, technological solutions (speed vs. stability), comparison with technological solutions of competition

  • The competence of developers of the technological solution: basic data on developers, their past experience, organization of work processes

  • Processes and workflow: a description of the production environment, a description of the test environment, the results of the audit of the program code and the results of so-called penetrative programme code tests, description of support processes

  • Intellectual property rights and licenses for a proposed technological solution: copyrights on the programme code, patents for a technological solution, contractual clauses with developers, description of software components that constitute third-party intellectual property and associated contract documentation (including open-source technical solutions), compliance with applicable licensing agreements

  • Technological plans: the planned timetable for further development of the technological solution (the future versions of the programme code), a description of key performance indicators, an internal development plan and an outsourcing plan.


The aim of the technological due diligence for the client is to:


  • Identify and define all technological, operational risks

  • Assess whether a given technology solution is innovative and features competitive advantages

  • Identify the gap between what the technological solution already allows and the ultimate goal, which enables the investor/buyer to better assess the further development costs.


In the context of technological due diligence, relevant documentation is reviewed (possibly with access to internal systems, such as GitHub or Confluence), a questionnaire is prepared and interviews with the chief technology officer and randomly selected developers are carried out. Technological due diligence is concluded with a “technological due diligence report”. The report consists of a summary regarding the technological solution and infrastructure, description of the advantages and risks of the technological solution in question, assessment of the technological plan and assessment of the competence of the development team.

Fintech Factory offers its clients

consultations related to performance of due diligence (objectives, scope)

legal due diligence service

tech due diligence service

liaising with experts covering other areas of due diligence (financial, tax, commercial)