Investigate the Target

The information-gathering stage is known as '____'.

• due diligence

• research

• exploration

• investigation

What document may the parties draw to proceed to the signing of the Sale and Purchase Agreement?

• Memorandum of Understanding

• Head of Agreement/Letter of Intent

• Non-Disclosure Agreement

• Partnership Agreement

The buyer will not enter into a binding commitment until it has as much information as possible about the target.

• True

• False

How does due diligence help in the negotiation process?

• By providing detailed information for informed decision-making

• By increasing the cost of negotiation

• By delaying the negotiation process

• By reducing the need for legal assistance

During the investigation process, what consideration must be given to the typical risk inherent in the market the target operates?

• Consideration of market volatility

• Assessment of regulatory environment

• Evaluation of competitive landscape

• Analysis of economic indicators

What should be explored if the target operates in a heavily regulated sector?

• Regulatory compliance requirements

• Market trends

• Customer preferences

• Technological advancements

What does the buyer of shares acquire?

• Ownership in the company

• A loan from the company

• A fixed interest payment

• A government bond

How does the buyer often agree to accept responsibility for certain liabilities?

• By signing a contract

• Through verbal agreement

• By ignoring the liabilities

• By transferring them to another party

Where does the buyer direct its investigation in an asset acquisition?

• To the seller's financial records

• To the market trends

• To the legal compliance

• To the asset's condition

What should a buyer do if the seller is not able to give much contractual protection?

• Seek legal advice to understand the risks involved

• Proceed with the purchase without any protection

• Cancel the transaction immediately

• Negotiate for better terms or warranties