Investigative Due Diligence
The risks inherent in today’s financial transactions – including mergers and acquisitions, as well as public offerings, joint ventures, private equity, venture capital, and other investments – are greater than ever.
While these kinds of deals often involve major commitments of capital and other resources, they may be based on expected synergies and anticipated profits – and not on verified business relationships, management experience or financial data. Kroll’s Investigative Due Diligence leverages the most comprehensive set of databases, deepest analysis of public records, and access to an elite network of domestic and international sources to enhance the success of a deal by uncovering potential vulnerabilities.
For close to four decades, Kroll has helped financial institutions, private equity groups, corporations and their legal counsel conduct in-depth, insightful investigations into prospective transactions to minimize risk and help ensure success.
Kroll provides comprehensive background information and intelligence including: personal and business reputations; financial and operating histories; verification of key non-financial representations; records of litigation and disputes; environmental liabilities and other actual or undisclosed problems. We examine misrepresentations or non-disclosure of material facts; financial management and system problems; unrealistic projections or overstated assets; unrecorded or understated liabilities; significant managerial or business issues; and independent business valuations. The end result is a detailed profile of any issue of concern enabling the client to manage the identified risk by restructuring or repricing the deal, or even exiting from the proposed transaction.
Case study: Private Equity Fund Considers Investing in a Tea Plantation
A private equity fund considering investment in a tea plantation engaged Kroll to investigate the plantation and its promoters to ensure that there was no history of fraud, and that it operated in a compliant and ethical manner. Kroll identified that the tea plantation and the individuals associated with it did not exist and concluded that the entire issue was an elaborate fraud.
Case Study: Private Equity Firm Invests in Foreign Currency Exchanger
Kroll conducted an in-depth due diligence investigation that assisted a private equity firm with the purchase of a majority stake in an international foreign currency exchange business (“FX”). Kroll examined the FX’s policies and procedures for money handling, cash reconciliation and anti-money laundering; processes and models for hedging the firm’s exchanges; and a thorough investigation of the FX’s management and significant employees. Our analysis allowed the private equity firm to completely understand the FX’s operations and compliance capabilities, and provided leverage in negotiations with the FX.