The due diligence process from the underwriter's - Fried Frank

• Correspondence with the SEC or other regulators (including
comment letters and responses)
• Attorneys typically review the company’s outstanding litigation
and, where necessary, interview outside counsel handling
principal litigation.
• Other areas where attorneys may provide particular expertise in
due diligence includes:
• tax diligence, particularly involving IRS investigations,
• intellectual property and a review of the company’s licensing
agreements,
• employee benefit plans and stock option plans,
• special regulatory issues, involving telecommunications or
other areas, and
• government, antitrust, SEC or other investigations of the
company’s business.
• The underwriters’ counsel typically provides a 10b-5 opinion to
the underwriter which states that the underwriters’ counsel is not
aware of any material misstatement or material omission in the
time of sale information package (i.e., the preliminary prospectus
together with a final term sheet or oral conveyance of final terms)
as well as the final prospectus. The underwriters will receive a
similar opinion from the issuer’s counsel. Courts have cited
receipt of this opinion as a factor in evaluating the underwriters’
diligence.
• Sometimes negotiation of the representations and warranties in
the underwriting agreement can raise due diligence issues if the
company is unable to make standard representations.
• Company counsel may prepare a formal legal due diligence
report in a European context.
f. Accounting Due Diligence
• The bankers and lawyers should interview the company’s principal
accountants and, where material, accountants of acquired entities.
Principal topics of discussion may include:
• the company’s accounting policies generally,
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