Commercial Due Diligence
Traditional commercial due diligence looks at an entity’s projected performance in the context of the market and competitive landscape.
However, commercial due diligence alone may not be sufficient for making investment decisions in some opaque business sectors or in emerging or frontier markets where reliable information may be scarce. Kroll combines commercial due diligence with political risk assessment and reputational risk assessment to offer clients a unique integrated approach to investment due diligence.
Kroll’s integrated approach merges commercial due diligence with our unmatched ability to reveal undisclosed liabilities, such as the subject’s history of corruption and bribery, the reputation of the company and its principals, the relationship and influence of political ties, providing investors with an accurate and true assessment of projected future income streams.
By combining sophisticated analytical commercial due diligence techniques with high-level information-gathering, Kroll’s reports provide context to forecasts for sales growth, incorporating a variety of potential scenarios which are based on an understanding of political or integrity issues in addition to purely commercial ones.
Case Study: A European Company Enters China’s Logistics Sector
Kroll was asked to study a logistics company in China on behalf of a European client who was looking to launch a joint venture there. The investment team at the client had already developed a commercial motivation for focusing on one partner as opposed to four others. Kroll analyzed the sector and the key players from a commercial perspective, but also discovered that there was legislation being considered in China that would have put non-state companies at a considerable disadvantage in one part of the logistics sector. This political issue had a direct effect on the commercial due diligence and the assumptions that governed the sales and growth forecasts for the potential partner to whom the client was leaning. Kroll conducted an integrated analysis of the five partners using this insight to more accurately assess future risks to performance.