Due Diligence Data Request and Clarification

The acquiring company's legal and financial teams request specific documents and data from the target company for due diligence, followed by clarification calls regarding the provided information.

Dialogue

Listen and follow along with the conversation

Acquiring Company Legal Counsel (Male)

Good morning, everyone. Thanks for joining. We've completed our initial review of the due diligence documents you provided, and we have a few follow-up questions, especially regarding the intellectual property portfolio and some of the outstanding litigation details.

Target Company CEO (Female)

Good morning. We're happy to clarify. Please go ahead with your questions. We want to ensure full transparency throughout this process.

Acquiring Company Financial Lead (Male)

Thanks. On the financial side, we'd like a detailed breakdown of the Q3 and Q4 2023 revenue recognition for your main product line. The figures provided seem to encompass a broader scope than we anticipated, and we need to reconcile that.

Target Company CFO (Female)

Certainly. The Q3 and Q4 revenue figures include a newly launched bundled service that integrates with our core product, which might explain the broader scope. I can have our finance team prepare a more granular report breaking down product versus service revenue for you by end of day.

Acquiring Company Legal Counsel (Male)

That would be very helpful, thank you. And regarding the intellectual property, specifically patent number US 1234567, could you confirm its status and provide any recent legal opinions or challenges associated with it?

Target Company CEO (Female)

Yes, I can confirm that patent is active and in good standing. We received a minor challenge last quarter from a smaller competitor, but our legal team successfully dismissed it. I’ll have our legal counsel send over the dismissal documentation immediately after this call.

Acquiring Company Financial Lead (Male)

Perfect, that clears things up on that front. One last thing – we noticed a significant increase in CapEx in the last six months. Could you elaborate on the nature of these expenditures?

Target Company CFO (Female)

Absolutely. That increase is primarily due to the upgrade of our manufacturing facilities and the acquisition of new, advanced machinery to boost production capacity. We have detailed invoices and project plans for those, which I can upload to the data room.

Acquiring Company Legal Counsel (Male)

Excellent. That covers our key clarification points for now. We appreciate the prompt and thorough responses. We'll review the additional documents once uploaded and will reach out if further details are needed.

Target Company CEO (Female)

You're most welcome. We'll get those documents uploaded as soon as possible. Thanks for your time, everyone.

Vocabulary

Essential words and phrases from the dialogue

due diligence

The process of investigating a company before a merger to check its finances, legal issues, and operations; it's like a thorough check-up to avoid risks.

intellectual property

Ideas or inventions owned by a company, like patents or trademarks; in business, it protects unique products from being copied.

litigation

Legal action or lawsuits between parties; it's used in business talks to discuss ongoing court cases that could affect a deal.

revenue recognition

The accounting rule for when a company records its sales or income; important in financial reports to show real earnings.

granular

Meaning very detailed or specific; in reports, it means breaking down information into small, precise parts for better understanding.

patent

A legal right given to an inventor to protect their idea for a set time; companies use it to safeguard new products.

CapEx

Short for capital expenditures, which are big investments in assets like machinery; it's key in business for long-term growth plans.

transparency

Being open and honest with information; in mergers, it builds trust by sharing all details without hiding anything.

Key Sentences

Important phrases to remember and practice

We've completed our initial review of the due diligence documents you provided, and we have a few follow-up questions.

This polite way to start a business discussion after reviewing info; use it in meetings to ask for more details. It uses 'follow-up' to mean additional questions, showing professional courtesy.

We're happy to clarify. Please go ahead with your questions.

A welcoming response in professional talks; 'go ahead' means 'start now.' Useful for showing cooperation, with simple present tense for ongoing willingness.

We'd like a detailed breakdown of the Q3 and Q4 2023 revenue recognition.

Requesting specific financial details; 'breakdown' means division into parts. Use in business emails or calls with 'we'd like' for polite requests, noting dates like Q3 for quarters.

I can have our finance team prepare a more granular report by end of day.

Offering to provide detailed info quickly; 'by end of day' sets a deadline. Helpful for promising action, using 'have someone do something' for delegation.

That would be very helpful, thank you.

Expressing appreciation in response to an offer; simple and polite. Use it anytime someone agrees to help, reinforcing positive business interactions.

We appreciate the prompt and thorough responses.

Thanking for quick and complete answers; 'prompt' means fast, 'thorough' means detailed. Great for ending meetings, using present tense for general thanks.

We'll get those documents uploaded as soon as possible.

Promising quick action; 'as soon as possible' shows urgency. Useful in follow-ups, with future 'will' for commitments in professional settings.