Transactional due diligence is a critical, investigative process undertaken before a major corporate or financial event to identify, assess, and mitigate inherited sanctions risks. Unlike routine compliance, which is ongoing, transactional diligence is a deep-dive, point-in-time forensic review of a target company, partner, or complex trade deal. When an entity proceeds with a merger, acquisition, or joint venture, it may inherit the target's pre-existing sanctions liabilities. Legal Sandbox Georgia provides specialized due diligence services to uncover these hidden risks, ensuring our clients can make informed, defensible decisions and are not exposed to successor liability for another party's violations.
Pre-Transaction Sanctions Due Diligence for M&A and JVs
This service is a fundamental component of any corporate transaction. It is a forensic investigation into a target company's sanctions compliance posture, ownership, and historical and current business relationships. This is essential for any acquirer, investor, or joint venture partner to avoid inheriting catastrophic legal liabilities. We conduct a sanctions-focused audit of the target, including tracing its Ultimate Beneficial Ownership (UBO) to uncover any hidden designated persons. We also perform historical lookbacks of its transactions to identify past violations. Our final deliverable is a formal due diligence report that quantifies the sanctions risk, outlines potential liabilities, and provides clear, actionable recommendations, such as the inclusion of specific warranties or indemnities in the deal agreements.
Analysis of Supply Chain Exposure to Sanctioned Entities or Jurisdictions
We conduct a comprehensive mapping and analysis of a company's or investment target's entire supply chain, including suppliers, logistics providers, freight forwarders, and transit routes. This is critical for businesses in trade, manufacturing, and logistics, particularly given Georgia's role as a key transit hub. The goal is to identify any direct or indirect exposure to sanctioned jurisdictions (e.g., Russia, Iran, North Korea), sectors, or entities. We provide a detailed risk map identifying vulnerabilities, such as a critical component sourced from a high-risk region, a logistics partner using sanctioned vessels, or a payments route passing through a high-risk bank. This analysis allows our clients to mitigate diversion risks and avoid secondary sanctions.
Contractual Sanctions Clauses Drafting and Review
Robust contractual language is a primary defense against sanctions risk. We draft and negotiate bespoke, legally precise sanctions clauses for inclusion in M&A agreements, loan facility documents, supply contracts, and shareholder agreements. These clauses include: (1) detailed Representations and Warranties, where the counterparty attests to its current and historical compliance; (2) Covenants, which obligate the counterparty to maintain compliance post-closing; (3) Audit Rights, allowing our client to verify compliance; and (4) Termination Rights, which provide a clear, penalty-free legal exit from the contract if the counterparty triggers a sanctions event. We also meticulously review clauses proposed by the opposing party to ensure they do not unfairly shift liability or create operationally impossible obligations for our client.
End-Use and End-User Certifications
This service is a formal due diligence process to verify the ultimate destination (end-use) and final recipient (end-user) of a product, which is a legal requirement for exporters, manufacturers, and traders of "dual-use" goods—items with both civilian and potential military applications. We design and implement the certification framework, which involves conducting due diligence on the stated end-user, assessing the plausibility of the stated end-use against diversion red flags, and drafting the legally binding certification document that the end-user must sign. This process creates a defensible, documented audit trail demonstrating that our client took all necessary and reasonable steps to prevent their products from being diverted to a sanctioned military, industrial, or government entity.
Trade Finance and Payment Screening
This is a highly specialized screening service for banks, financial institutions, and corporate treasury departments that goes far beyond simple name-matching. We analyze the details of a trade finance transaction, including all underlying documentation (Letters of Credit, Bills of Lading, invoices) for any hidden sanctions nexus. This includes screening vessel names and IMO numbers against maritime advisories, checking for port calls in sanctioned jurisdictions, analyzing commodity codes for dual-use goods, and scrutinizing payment messages (like SWIFT MT103/MT202) to ensure no designated banks are involved in the correspondent payment chain. This prevents the facilitation of a prohibited transaction, which carries the same legal penalties as being a direct party to it.
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