Site
Visits

SUMMARY

A site visit is when a buyer or any of its representatives visits a physical location of a target company to inspect it prior to closing.

Site visits are advisable whenever a buyer is contemplating purchasing a business where real estate, inventory, or other tangible property are key economic drivers.

Examples include manufacturing and healthcare facilities, transportation centers, retail locations, and construction sites.

PRE-SIGNING OPERATIONAL DILIGENCE

Site visits made before signing provide invaluable operational due diligence because they allow a business team to confirm the physical condition of the target business and its assets while negotiating definitive transaction documents.

Even though indemnification packages may grant post-closing relief to a buyer for shortcomings in the physical condition of a target’s assets, site visits made prior to signing provide an opportunity for the parties to address these issues as part of deal discussions.

INSPECTIONS & SAMPLINGS

Depending on the nature of a target’s business, it may be desirable for a buyer to send environmental specialists to take local samples to complete reports (e.g., if Phase II reports are needed) and other independent experts to confirm operations satisfy operational health and safety requirements.

Any samplings and inspections are typically coordinated directly between a buyer and seller.

INTERIM-PERIOD RESTRICTIONS

In a staggered sign/close transaction, the main transaction agreement will include a pre-closing covenant around a buyer’s access to the target company during the interim period. Any site visits, contact with target employees, inspections, and (if allowed) environmental samplings will need to comply with the access covenant.