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Company Due Diligence in Malta

Company Due Diligence in Malta

Foreign investors looking to do business or wanting to purchase a company in Malta are advised to appeal to a professional firm that will perform due diligence procedures.

Company due diligence assesses the company’s legal and financial background to mitigate potential risks associated with business activities. Our lawyers in Malta specialize in conducting thorough due diligence processes. We understand the critical importance of this procedure, particularly for foreign investors and those considering company acquisitions.

Types of due diligence procedures in Malta

Company due diligence in Malta can be performed depending on what the investors want to find out. Maltese company due diligence is divided into:

  • commercial due diligence on the implemented business pattern, target industry or market,
  • financial due diligence performedon the economic status of a company,
  • legal due diligence performed on the legal status of a company.

Our Maltese lawyers can perform the type of company due diligence our clients request. We also inform you that our services also extend to real estate due diligence when purchasing property in Malta. 

Assistance in commercial due diligence

It is highly advisable to get assistance from our Maltese lawyers, especially when it comes to complex business acquisitions for which commercial due diligence is required.

Determining the appropriate legal structure for the acquisition can be complex. Our lawyers can help you decide whether it should be an asset purchase, stock purchase, merger, or another structure. Each has different legal implications.

In terms of negotiations, our attorneys in Malta can assist in negotiating the terms of the acquisition agreement, including price, warranties, representations, and other conditions.

Conducting thorough commercial due diligence involves examining contracts, financial records, and potential legal liabilities. These steps are performed by our lawyers carefully.

If the target company operates in a regulated industry or there are specific regulatory concerns, our team can guide the process of due diligence in Malta to ensure that the potential acquisition complies with all relevant laws and regulations.

Performing financial due diligence in Malta

Financial due diligence in Malta is a detailed review of a target business from financial, fiscal, and commercial perspectives. It aims to add value by focusing on critical issues that are likely to impact the decision to acquire the business and the pricing of the acquisition.

Our law firm in Malta offers an investigative analysis of businesses, assessing key issues, drivers of sustainable profits and cash flows, financial risks, and potential deal breakers in a transaction. The goal is to provide clients with a better understanding of the deal.

We gather, analyze, apply, and deliver the necessary information for clients to assess and execute the deal. Our focus is on critical areas, offering insights into key negotiation points and pricing considerations.

Our approach aims to assess how the transaction can enhance the company’s financial performance, including analyzing actual earnings, financial projections, and cash flow generation, among others. 

It is worth noting that tax due diligence in Malta is a crucial part of the process. Identifying tax risks can significantly impact the target company’s market value and play a vital role in price negotiation. The aim of tax due diligence is to analyze the target’s tax treatment to ensure compliance with Maltese tax regulations, legislation, and instructions from the Maltese Ministry for Finance. This includes an analysis of tax settlements, social security contributions, and historical tax controls by relevant authorities. Our Maltese lawyers will handle the tax due diligence if you require.

Additionally, our focus on tax due diligence can have a significant impact on the negotiation process and the overall success of the transaction.

The legal due diligence in Malta

Nowadays, shareholders also perform due diligence processes on their own company. Legal due diligence is often employed in Malta by companies that want to evaluate their business in order to increase market visibility and strengthen ties with existing customers. Depending on the type of due diligence,the process can be short requiring only a few days, or complex, case in which it could expand over a longer period of time.

Legal due diligence can include subcategories like intellectual property due diligence, business due diligence, and accounting due diligence, each seeking specific pieces of information. Our team of lawyers in Malta performs all types of legal due diligence in Malta.

They have a deep understanding of legal matters, including contractual obligations, regulatory compliance, and potential liabilities. Our lawyers can identify legal issues that may not be apparent to non-legal professionals. It is also important to verify that the target company is in compliance with relevant laws and regulations, which is essential to avoid potential legal issues.

Our team will provide a legal opinion based on our findings during the due diligence process. This opinion can be invaluable when making informed decisions about the transaction.

We can help you if you are seeking to conduct due diligence in Malta.  

Why is due diligence required in Malta?

The purpose of due diligence in Malta mainly depends on what the client’s demands regarding the situation of a company. Due diligence is usually performed when investors require relevant information regarding a company they will engage in business with in order to have clear knowledge about the risks they are exposed to and if any precautions are needed.

Company due diligence is also performed when concluding a contract or making a purchase from a company. Maltese company due diligence is also employed when buying a company and details such as possible litigation or employment disputes need to be made aware of.

Due diligence plays a role in attracting and safeguarding foreign investments in Malta. Here are a few statistics about the country’s direct foreign investments (FDI):

  • FDI in Malta has maintained an average of 1722.58 million euros annually from 2003 through 2023;
  • In the second quarter of 2023, Malta saw a rise in the FDI, with an increase of 2421.30 million euros.  
  • The capital flows in the second quarter of 2023 totaled 930,549 thousand euros

If you want to buy a company or set up a business, you can contact our Maltese law firm. We also provide real estate due diligence for those interested in buying a house in Malta, which is a highly recommended step in the purchase procedure.