MORRISON&FOERSTERLLPHowtoWriteaDueDiligenceReportforInvestmentPurposesTheMostPopularDraftingModelforMemosandDDReportIntheUnitedStates’legaleducationorpractices,IRACstructureisthemostusedwritingprocessforeachandeverylegaldocument.Itisefficient,andveryeasilytobegrasped.I------issueR-----rulesandcases,backgroundA-----analysisC----conclusionWecancomparethisstructurewithourChinese’sclassicalwritingmethods:qi(起),cheng（承）,zhuan（转）,andhe（合）.TheInvestmentModelAninternationalinvestorwishestoputsomecapitalmoneyintoadomesticcompany,wecallitatargetcompany,andafterthetargetcompanyearnsenoughprofits,forinstance,thecompanycanmakeanIPOinChinasecuritiesmarket,thentheinvestormaywithdrawitinvestment,plusthepremiuminterestsorprofitsfromthecompany,bytransferringthesharesithasinthetargetcompany.Itshouldbenotedthatinthisprocess,theinvestorshalldealwiththeshareholdersofthetargetcompany.AtcurrentChinafinancialmarket,probablyalltheshareholderswishtogotothepublicmarkettoattractmoreinvestment,sodealingwiththeseshareholdersisnotamajorproblem.Themajorproblemishowtoavoidthelegalandthefinancialrisksintheinvestment.Whatiftheinvestmenthassomelegalobstaclesthatprohibititfromwithdrawal?ThisisthekeyissueandthemostimportantconcernintheDDReport.DefinitionAduediligencereport,alsocalledDDReport,isawidelyusedlegaldocumentintoday’slegalpractice.Especiallyininternationalinvestmentactivities,DDReportcanhelptheinvestortomaketherightdecisionforitsinvestmentstrategies.WhatisaDDReport?Wecandefinethelegaldocumentasthekeyandbasicinformationaboutatargetcompany’sfinanceandmanagement.Theinformationcanshowtherisksorthebenefitsfortheinvestments.Beforetakinganyactions,arationalinvestor,ofcourseincludingalltheexperiencedones,generallywillretainalawfirmoranaccountingfirmtodothereport.WecancompareaDDReportwithyourpersonaldiary.IwritealltheactivitiesIdidinonedayintomydiary,andformostoftimes,IonlygiveashortsummaryofthemostimportantthingsIhadinthisday.Forinstance,IdonotwritewhatIeatinacommondayinmydiary,butIwilldescribeonedishindetailifIattendmyfriend’smarriageceremony,ifthisdishimpressedmesowell.Imeanwhetheritisverydelicious,oritisverybadlytasted.Thereasonissimple,itgivesmesomeunusualexperience,pleasantorunpleasant.bj-25398v4MORRISON&FOERSTERLLPPreliminaryDueDiligenceDocumentRequestListADDReportshowsuswhatwereadandexaminedinthedocumentscomingfromthetargetcompany.Wewritewhatwesawinthesedocumentsandreportthemtoourclients,justaswewritewhatweexperienceinonedayforourdiary.Ofcourse,sincethedocumentsaresobigandwegenerallyhavetomakemostsummariesforourwritings.Occasionally,wejusttranslatesomeofthekeydocumentsfromChineseintoEnglishandputthemintoourreport.BecauseIamalegalpractitioner,IwillexplaintheDDReportfromalegalpointofview.Asaresult,theDDReportformyclientmustshowthemostimportantinvestmentrisks.StepstoDotheDDReportGenerally,ifwewishtohaveacompleteDDReport,thefollowingfourstepshavetobefollowed.AndamoderateDDReportusuallywilltakeustwotothreeweekstofinish.StepOne:CollectAlltheInformationfromtheTargetCompanyAtthisstep,weshallproduceaDocumentationRequestListandasktherelevantlegaldocumentsfromthecompany.Igiveyousuchanexampleasanattachmentone.Letusgothroughthelistveryquickly,Iamsurethatafteryouhavefinishedreadingofthislist,youcangetaroughimpressiononatargetcompany’sstructure,andmanagementsystem.StepTwo:ReviewtheDocumentsandProduc...
