Due Diligence Services in India
Legal due diligence is the process by which a buyer, investor, or counterparty examines the legal health of a business before committing capital. A thorough due diligence review identifies legal risks that affect the transaction structure, the valuation, or the decision to proceed at all, undisclosed litigation, regulatory non-compliance, IP ownership gaps, FEMA violations, problematic contract terms, and governance irregularities that a standard financial review will not surface. Y&A Legal conducts legal due diligence for M&A transactions, private equity and venture capital investments, startup fundraising rounds, and joint venture formations. We also advise target companies and founders on sell-side due diligence, preparing the company’s legal position before buyers arrive. Our due diligence reports are designed to be actionable: every finding is characterised by risk level and paired with a recommendation on how it should be addressed in the transaction documentation or resolved before closing.
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Detailed Reports
Every finding characterised by risk level
M&A & Investment
Buy-side & sell-side transactions
Pan-India
Corporate due diligence advisory
How We Help
Buy-Side Due Diligence for M&A
Buy-side due diligence examines the target company’s legal position across the dimensions most relevant to an acquirer: corporate structure and governance, material contracts and their change-of-control provisions, IP ownership and licensing, employment agreements and ESOP obligations, pending and threatened litigation, regulatory compliance (company law, DPDP, POSH, FEMA), tax assessments and demands, and sector-specific licences. We produce a due diligence report that identifies all material risks, rates them by severity, and recommends how each should be addressed, as a condition precedent to closing, a warranty item, or a post-closing obligation.
Sell-Side & Vendor Due Diligence
A founder or company selling equity benefits significantly from conducting their own due diligence before a buyer’s team arrives. Sell-side due diligence identifies legal gaps, a missing board resolution approving an ESOP, IP not formally assigned to the company, an employment contract inconsistent with current arrangements and gives the seller time to resolve them before they appear in the buyer’s report and affect the valuation or deal terms. We advise founder exits, PE sell-side transactions, and strategic asset sales, preparing the company’s legal position for the scrutiny that follows a signed term sheet.
Startup Investment Due Diligence
Investors in early-stage startups conduct legal due diligence before closing an investment round. This typically covers the company’s incorporation documents, founding agreements, IP assignments, any existing investor documentation, and the cap table. Startups that have not structured their legal documentation carefully from inception often discover gaps at this stage, equity not vested on a proper schedule, IP still in a founder’s personal name, or an undisclosed pre-existing agreement with a competitor. We advise startups on identifying and resolving these gaps before raising a round, so the due diligence process moves cleanly.
FEMA & Foreign Investment Compliance Review
For transactions involving foreign investment, a foreign acquirer buying an Indian company, an Indian company raising capital from a foreign VC fund, or an NRI making an investment in India. FEMA compliance is a distinct due diligence dimension. Violations of FEMA’s reporting and pricing requirements can attract significant penalties and block a transaction from closing. We review FEMA compliance as part of our due diligence work, advising on whether prior investments were structured correctly, what filings are outstanding, and how any violations can be compounded before the transaction closes.
Why Investors & Acquirers Choose Y&A Legal for Due Diligence in India
Due diligence reports that list every legal issue without distinguishing material risks from administrative gaps are not useful to deal teams. We structure our reports to give clients actionable output, every finding is characterised as a deal-stopper, a condition precedent, a warranty item, or an administrative matter to be resolved post-closing. This allows deal teams to focus on the risks that affect the transaction rather than spending disproportionate time on technical irregularities with no commercial impact.
The depth of due diligence should match the size and nature of the transaction. A seed investment in a pre-revenue startup needs a different scope than the acquisition of a profitable mid-market company. We scope our due diligence engagements explicitly at the outset, agreeing with clients on the areas to cover, the depth within each area, and what falls outside scope, so the report covers exactly what you need it to cover.
We conduct due diligence for both sides of transactions, buyers and sellers and for investors conducting pre-investment checks. Founders preparing for a fundraising round or an M&A exit benefit from our sell-side advisory, which gives them a lawyer’s view of their company’s legal position before a sophisticated buyer’s team arrives and uses every gap as a negotiating lever.
Frequently Asked Questions
What does legal due diligence cover in an M&A transaction in India?
Legal due diligence in an Indian M&A transaction typically covers: corporate records (certificate of incorporation, MoA, AoA, board resolutions, shareholding pattern), material commercial contracts with change-of-control provisions highlighted, IP ownership and registration status, employment agreements and ESOP structure, pending and threatened litigation, regulatory licences and compliance (Companies Act, FEMA, DPDP, POSH, sector-specific), tax assessments and demands, and real property ownership or lease arrangements.
How long does legal due diligence take in India?
The timeline depends on scope and the completeness of the data room. A focused review for a seed-stage startup investment typically takes 1–2 weeks. A comprehensive review for an M&A transaction involving a complex contract portfolio, pending litigation, and regulatory exposure may take 3–5 weeks. We agree on a timeline at the outset based on the scope and the anticipated volume of documents to review, and we flag early if the data room is incomplete and the timeline needs to be adjusted.
What is a due diligence data room and what should it contain?
A data room is a secure repository of the target company’s documents made available to the buyer’s or investor’s due diligence team. For a startup fundraising round, a typical data room contains: incorporation documents, founders’ and shareholders’ agreements, ESOP plan and grant letters, all material commercial contracts, employment agreements, IP registration certificates and assignments, existing litigation or regulatory correspondence, and financial statements. We advise target companies on what to include and how to organise their data room for the most efficient due diligence review.
What is sell-side due diligence and why should a founder do it before an M&A process?
Sell-side due diligence is a legal review of your own company conducted before a buyer’s team arrives. It identifies gaps, a missing IP assignment, an improperly structured ESOP, a contract with a change-of-control clause that restricts the sale, that would otherwise appear in the buyer’s report and give them a basis to reduce the valuation or require renegotiation. Sellers who resolve these issues in advance avoid having them used as negotiating leverage, and the overall M&A process is significantly faster and cleaner.
What is FEMA due diligence and when is it relevant?
FEMA due diligence is a review of a company’s compliance with the Foreign Exchange Management Act, whether prior foreign investments were at the correct valuation, reported to the RBI on time, and structured in compliance with the FDI policy. It is relevant whenever a transaction involves a foreign investor, a foreign acquirer, or a company that has previously received foreign investment. FEMA violations are common in early-stage Indian startups where the team lacked FEMA advice at the time of the initial investment, and they can significantly complicate a later M&A or fundraising transaction if not addressed proactively.
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Written by Yuvraj Rana, Advocate & Co-Founder, Y&A Legal