Lists which are abstractly concerned with information to be obtained prior to the purchase of a company are mostly incomplete in actual practice. This also applies to the present specimen of an "investment Guideline". In the final count, the extent and substance of what information is required on the company being sold depends on the individual case.

The following comments are relevant:

A) With each purchase of a company, it is important to obtain all information about the organisation and the general circumstances of the company to be purchased. The schedule of information included in Section A can be used as points of reference. There are more specific details which have to be additionally observed under German law, however. As already mentioned in the comments on the "Asset Purchase Agreement" and the "Share Purchase Agreement as the master contract, these include the said documents originating from the trading accounts. An inspection of the minutes of all meetings of shareholders, the Management Board and the Supervisory Board referred to in Section 1 may be particularly meaningful as well. If these cover a longish period of time, the business policy of the company to be sold can be estimated and assessed far better. This reference in the Purchase Investigation Guideline is particularly important in this respect.

It is therefore urgently advised to obtain information on which public approvals and licenses, etc., have been issued in favour of the company to be taken over.

B) Determining the capitalisation status of the company to be sold is also important, in just the same way as obtaining information on all major branch operations. The clauses in Section B can all be taken over in German practice.

C) Section C of the "Investigation Guideline" may also be taken over in full with the purchase of a company in Germany. For evaluating the company to be purchased, it is of critical importance for the potential buyer to be in possession of precise knowledge on the property and all rights and obligation of the company to be purchased.

D) All information on the management and the employee contracts in the company to be bought is also of major importance. In addition to reviewing the contractual ruling between the company to be purchased and its management or employees, account has be taken of the special rulings under employment law which have been covered in the discourse on the Asset and Share Purchase Agreements.

The specimen of a due-diligence list is shown in subsequent sections as customary in German practice. This specimen makes no claim to completeness. On the contrary, it should be adapted to the requirements and specific features of the relevant facts and circumstances from case to case.

For further information please contact Dr Erich Michel, Wessing Berenberg-Gossler Zimmermann Lange, Freiherr-Vom-Stein-Strasse 24-26, Frankfurt am Maim 60323, Frankfurt, Germany- Tel: +496 997 1300, Fax: +496 997 130100.

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