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Do you “really” know who you are doing business with?

Due diligence is critical in today’s business environment as the level of public scrutiny continues to grow. At PKF Integrity, 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 more. 

Recently, PKF Integrity was engaged to conduct due diligence enquiries into the backgrounds of four directors who were collectively investing US$10 million, through a joint venture agreement, into our client’s manufacturing plant. PKF Integrity 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 flow 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. We looked beyond the traditional financial metrics and conducted background searches on all four directors including (but not limited to):

  • Social media 
  • Third party enquiries 
  • Asset searches 
  • Criminal checks 
  • Civil litigation 
  • Bankruptcy/insolvency 
  • Regulatory review 
  • Global compliance checks including major international online sanctions, enforcements and world-check proprietary suite of risk and compliance databases.  

Among other findings, we discovered that: 

  • One director had been indicted for corrupt behaviour of bribing a police officer and was imprisoned 
  • One director had a close relationship with one of the wealthiest individuals in China and this individual did not have a good reputation amongst his peers 
  • One director was involved in a lawsuit in which they were a defendant to a contract dispute 
  • One director was identified to be a politically exposed person as they were a current member of a powerful political party.  

Our findings allowed our client to make an informed decision on the joint venture. In some instances, clients may walk away after discovering such 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 the additional 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 imperative to conduct the fourth arm of due diligence, which is reputational or business intelligence.    

Accurate and up-to-date intelligence is a key component in your decision-making process. Let PKF Integrity be your trusted advisers in providing due diligence enquiries for your business. 



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