Categories: Mergers & Acquisition Advisory
Indicted Attorney Identified in Due Diligence Investigation
Mergers & Acquisition Advisory
Investigative Due Diligence
Retained in connection with an investment in a proposed roll-up of nursing homes and assistive living facilities. The proposed investment target was requesting $100 million to acquire and combine multiple nursing home and assistive living facilities to bring them under a common ownership structure and brand. Comprehensive open source and public record background investigations were performed to provide the investor with negative assurance there were no problems that would prevent the proposed transaction from going forward. One individual who had been identified as the person who had provided the venture with its seed capital had some issues in his background. These initial findings included an indication that his claimed net worth was not consistent with the multiple liens, judgements and bankruptcy proceedings that were ongoing. Most concerning was a finding that someone with the same name had been indicted by a state Grand Jury in Northern California but for which no further details were available. This finding came 48 hours before the deal was scheduled to close. The closing was postponed pending further investigation. A field investigator was deployed to attempt to gather further information. The investigator confirmed that the indicted individual was the same person seeking investment capital. The investigation further revealed that the indictment was in connection with this person's law practice in which he was charged with absconding $3 million in funds held in escrow for his law clients, that his law practice had recently declared bankruptcy and the state's criminal case was on hold pending the forthcoming federal indictment for fraud and money laundering. During the pendency of the investigation, a federal grand jury did in fact charge the attorney with fraud and money laundering. The investment bank cancelling the transaction avoiding a potential $100 million loss.
Post Merger Integration Remediation – China
Mergers & Acquisition Advisory
Risk Mitigation Strategy
In connection with a U.S. manufacturer's acquisition of a China-based competitors, a FCPA-themed due diligence investigation was performed that revealed inappropriate relationships with members of the Chinese military including a series of improper payments. The team worked with the client's General Counsel, Internal Audit executives and outside counsel to develop and implement a series of compliance remediation steps as part of a Compliance Action Plan (CAP). The CAP required the acquisition target to take a series of steps to remediate its internal controls, compliance program and business operation and included severing customer ties with the Chinese military. Subsequent to the implementation of the Compliance Action Plan, a specialized audit was performed to measure if the agreed upon remediation steps had been taken. The audit confirmed that the acquisition target had largely complied with the remediation plan and the deal was able to move forward to closing.