accountants and business advisers
05 Jan 2018
Due diligence is critical in today’s business environment as regulator, shareholder and public scrutiny is greater than ever. At pkf, our business intelligence offering is designed to provide our clients with the necessary information to minimise the risks associated with a variety of commercial transactions including mergers and acquisitions, appointment of channel partners, procurement and/or pre-approval of contractors, appointment of senior executives and many more.
Recently, PKF in Australia was engaged to conduct due diligence enquiries in relation to four directors whom collectively were investing US$10 million – through a joint venture agreement – into our client’s manufacturing plant. We were provided with a Mergers and Acquisitions due diligence report by a third party and there were no indications to suggest the deal should not go through. Our client was looking to grow and required the funding. The four directors saw value in the proposition and were eager to invest. On paper, everything looked positive, the directors were very successful business owners and investors. They had significant assets, positive cash flows and low debt. More often than not, clients are happy to continue with the transaction.
In this instance, though, there were red flags associated with all four directors.
Our team looked beyond the traditional financial metrics and conducted background searches on all four directors including (but not limited to):
Our findings revealed, amongst others:
Our findings allowed our client to make an informed decision on the joint venture. In some instances, clients may walk away following the identification of these red flags, as the risk of reputational damage may outweigh the considered benefits to the company. However, in other instances, companies may be willing to take on this added risk and use the findings to negotiate more favourable contractual agreements with the other party.
Our business intelligence service can help minimise your organisation’s risk.
In addition to fundamental financial, legal and operational due diligence it is increasingly imperative to conduct the 4th arm of due diligence – reputational or business intelligence. Accurate and up-to-date intelligence is a key component in your decision-making process. Let PKF be your trusted advisers in providing you with this information.
Source: PKF Australia
For more information on how our services can help your business get in touch.