When a business in California is considering a merger with another business, there are many formalities and regulations that must be followed properly. Acting in a way that does not promote due diligence can prove fatal to a merging company. It is also crucial for companies to understand current market parameters and to take a pragmatic approach to negotiations in order to achieve the best outcome possible.
As companies begin the merger process it is important to review all of the other company's articles, bylaws, property, financial information, licenses and environmental issues. A complete knowledge of the other company is crucial when acting with due diligence. Due diligence can be described as acting in a way that a businessperson in a similar situation would act. Due diligence is essential for both past company behaviors and future behaviors in the process of the merger.