What needs to be ensured regarding regulatory compliance during due diligence?

Ensuring confirmation of permits and licenses is critical during the due diligence process because it provides verification that a business is operating legally and in accordance with applicable regulations and industry standards. This step helps to mitigate risks associated with regulatory violations that could result in significant penalties, operational disruptions, or even business closures.

Checking that all necessary licenses and permits are in place and valid ensures that the business has the authority to operate in its specific industry and jurisdiction. This becomes especially important in sectors that are highly regulated, where the absence of required licenses can lead to legal repercussions and affect the transaction's value or feasibility.

In contrast, while compliance with business report filing times, approval ratings for product launches, and compliance with marketing strategies may be relevant to the overall health and success of a business, they do not directly address the legal framework and regulatory requirements that are crucial for safe and responsible operations. Thus, these factors may not be as critical to verify during due diligence when compared to permits and licenses.