The Value of Due Diligence

Portfolio

A Secure Source client, a multinational energy company in the initial stage of a high profile equity investment, expended substantial amounts of time and money conducting its preliminary analysis over a period of 6 months. However, they failed to research the reputation and integrity of the targeted business. At the 11th hour, just prior to issuing a check for millions of dollars, the Senior VP of Acquisitions inquired about the results of the investigative due diligence, only to discover that it was never conducted.

The project manager, fully committed to the deal, was convinced an investigation would be a total waste of time. However, at the insistence of his supervisor, Secure Source was contacted and quickly uncovered the questionable reputation of the target company's president, who had serious financial problems and was in the midst of a bitter divorce.

By fully documenting previous bankruptcies, and with a past record of deceitful practices, Secure Source's investigation convinced the project manager to terminate the negotiations.

When considering an acquisition, conducting due diligence inquiries is a proven "best practice".