Due diligence before a deal: four decisions for the buyer

  • Define what you are acquiring first: an equity interest in a company, selected assets, or an investor's participation and control rights. The transaction structure determines the entire review.
  • Do not stop at an ASP extract. It shows the registered position but does not reveal every contract, obligation, dispute or internal corporate decision.
  • Require a practical response to each material red flag: remedy it before closing, obtain consent, adjust the price, add contractual protection or refuse the risk.
  • Preserve the right to reassess the deal if the seller cannot document a key fact or an official source contradicts the information disclosed.

Legal due diligence is the review conducted before buying a business or an equity interest, or before making an investment. Its purpose is not to issue a certificate that “everything is clean.” It reduces uncertainty before the buyer takes a binding decision. A useful report identifies what has been verified, what information is missing, how material the risk is and how the transaction documents should address it.

Legal due diligence reviews rights and liabilities, not business returns

Legal due diligence answers legal questions: who owns the equity interest, who can approve and sign the transaction, what the company owns, which contracts bind it, and whether there are security interests, disputes, permits or compliance risks. Financial diligence reviews the figures, debt and cash flows; tax diligence focuses on calculations and liabilities to the budget; technical diligence assesses the product or asset. These workstreams complement one another but are not substitutes.

Due diligence is also deeper than a routine counterparty check and requires broader access. Before signing a commercial contract, confirming the legal entity, the signatory's authority and several external risk signals may be enough. Before buying a company, counsel examines the history of corporate approvals, title to the equity interest, key contracts, assets and non-public documents.

The deal structure is critical. Under Law no. 135/2007, a Moldovan SRL is a legal person and is liable for its obligations with its own assets. In an equity acquisition, the owners change but the reviewed company remains the same legal person. Its contracts, litigation exposure and possible violations do not disappear when a new member enters. This does not mean that the buyer becomes personally liable for every company obligation; it means that the acquired company's value depends on what is already inside it.

In an asset acquisition, the review can focus on selected property or a selected part of the business. The structure creates different questions: does the seller own the asset, is it encumbered, can the relevant contract, permit or workforce be transferred, and whose consent is required? The choice between an equity deal and an asset deal should therefore be made before the final diligence scope is agreed.

The due diligence scope follows the deal and the business model

There is no universal checklist that works equally well for an IT startup, a logistics operator and a clinic network. The scope should be risk-based: rights, contracts and permits without which the business loses its core value deserve deeper review.

Corporate structure registration, articles, members, beneficial owners, administrator, resolutions, history and title to the equity interest a defect in title or approval may block the transfer and create a corporate dispute Key contracts customers, suppliers, loans, leases, guarantees, exclusivity, termination and change of control counterparty consent or contract termination may alter the value of the business Disputes and insolvency court cases, claims, inspections, enforcement and signs of insolvency an existing or contingent claim may require a reserve, specific protection or withdrawal Assets and encumbrances real estate, leases, equipment, vehicles, pledges and third-party rights the buyer needs to know what the company owns and what limits its use or sale Permits and regulation licences, authorisations, sector conditions and approvals required for the transaction the business may depend on an instrument that must be renewed, preserved or approved again Team, intellectual property and data employment and contractor agreements, rights to code and content, trademarks and personal data the company may not legally control its core product, team or customer database

The review must also cover mandatory transaction approvals. A change of control may require a Competition Council notification, prior investment approval or consent from a sector regulator. These questions should not be left until signing: a missing approval can stop closing after both sides have already spent time and money on negotiations.

Review the business before risk enters the price

Colenco Legal defines the due diligence scope, reviews corporate records, key contracts, assets and regulatory risks, and converts the findings into terms for negotiation and closing.

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An ASP extract is not enough: how legal due diligence works

The process starts with a short deal map, not a request to “send every document.” Counsel clarifies the structure, sector, party jurisdictions, financing source, materiality threshold, timetable and decisions the client must make. This produces a focused request list without hundreds of irrelevant items.

First, the parties create a controlled document space

The seller uploads corporate records, contracts, asset information, permits, dispute materials, employment files and intellectual-property records to a protected data room. Versions, dates and the link between each answer and its supporting document should be preserved. An NDA governs confidentiality, but it does not permit unrestricted collection or disclosure of any data.

Law no. 195/2024 on personal-data protection has been in force since 23 August 2026. For the data room, this calls for a clear access purpose, the minimum necessary volume, a limited user group and secure storage. At an early stage, for example, the buyer will not usually need excessive personal information about every employee and customer.

Next, the documents are tested against official sources

An ASP extract provides the basic corporate layer: IDNO, registered office, administrator, capital, members, equity interests, principal activity and beneficial-owner information. ASP also states that access to beneficial-owner data is granted, subject to personal-data rules, to persons who demonstrate a legitimate interest.

Depending on the company, counsel also reviews court publications, insolvency information, the Real Estate Register, the Register of Movable Real Guarantees, AGEPI databases and records of permissive acts. Each search is recorded with its date and limitations. No result in one register does not prove the absence of all debts, arbitrations, undisclosed side agreements or future claims.

The result is a material-risk report with clear answers

If a document is missing, counsel does not replace it with an assumption. The gap becomes a question for the seller; the answer is checked against other evidence, and the review limitation is recorded. Each report finding should identify its source, materiality and proposed action. Otherwise, the buyer receives an archive of comments rather than a negotiation tool.

Material red flags should change the deal, not merely appear in the report

A red flag is not every typo in an old corporate resolution. It is a fact or information gap that can affect title to the acquired asset, the company's value, its ability to continue a core activity or the buyer's exposure after closing.

  • Title to the equity interest is unclear. The corporate records and registered structure conflict with the seller's documents, or there is a pledge, a dispute or an unexplained prior transfer. Until the chain of title is verified, the transfer should not be treated as a technical formality.
  • A valuable asset sits outside the company. The trademark is registered to a founder, contractors created the code without a clear assignment, a related party owns the warehouse, or a personal account pays for the domain. The asset may need to be transferred or licensed, or the perimeter and price may need to change.
  • A key contract depends on a change of control. The counterparty may require consent, gain a termination right or change commercial terms. Obtaining consent can become a mandatory condition before closing.
  • A permit does not match the actual activity. The review must cover not only the document's existence but also its scope, term, holder and the consequences of the chosen transaction structure.
  • A dispute or encumbrance contradicts the seller's representations. The claim amount, procedural stage and secured asset matter more than the general label “there is litigation.”
  • The seller withholds material information. Refusal alone does not prove a violation, but it leaves the risk unverified. The buyer may narrow the perimeter, require specific protection or stop the process.

Two Moldovan regulatory questions deserve early attention. According to the Competition Council, current as of 1 September 2026, a concentration must be notified before implementation when the combined worldwide turnover of the undertakings concerned in the preceding year exceeds MDL 50 million and at least two undertakings each generated more than MDL 20 million in Moldova. Control, group composition and turnover are assessed for the specific transaction; the thresholds should be rechecked before implementation.

Separately, Law no. 174/2021 requires prior approval for covered investments in fields important to state security. The current Council for the Examination of Such Investments may approve, approve with conditions or refuse an investment. This is not a rule for every company acquisition, but the procedure should be assessed before investment if the company's activity or assets fall within a regulated field.

Due diligence findings become price, protection and closing conditions

The same finding does not always require walking away. The response depends on the risk's size and likelihood, whether it can be remedied and who can control it after the acquisition.

a document can be corrected before the equity transfer remedy the defect and make completion a closing condition the exposure is uncertain but can be capped adjust the price, retain funds in escrow or provide a specific indemnity counterparty or authority consent is required obtain consent before implementation or change the structure the company does not own a key asset transfer or license the asset, change the perimeter or adjust the price the risk cannot reasonably be valued or controlled pause negotiations or withdraw from the transaction

The specific mechanism must fit the governing law and the transaction documents. A seller representation does not cure a title defect by itself, and a specific indemnity is useful only when its trigger, amount, duration and payment source are clearly defined.

Colenco Legal can join before the data room opens or after the transaction has started. The engagement normally includes defining scope and exclusions, preparing the request list, reviewing documents and official sources, follow-up questions to the seller, a focused material-risk report and recommendations for the term sheet, equity purchase agreement or investment agreement. When needed, the team also supports document remediation, negotiations and closing.

Timing and cost depend on the transaction structure, sector, number of companies and jurisdictions, document quality, materiality threshold and report format. The right first step is therefore not a promise to “check everything” within a fixed number of days. It is to define which answers can genuinely change the buyer's decision.

The value of due diligence is not measured by page count. It lies in turning legal risk into a manageable decision early enough. The review should start before an irreversible payment and before the buyer accepts obligations that leave no room to renegotiate the deal.