Due Diligence

Due Diligence

Business opportunities and business risks are often inextricably linked. Institutions face escalating regulatory and compliance requirements that mandate appropriate screening and due diligence of customers, partners and vendors. The Foreign Corrupt Practices Act (FCPA) and UK Bribery Act (UKBA) govern companies operating in jurisdictions that lack transparency. In this regard Aratus provides comprehensive due diligence support to corporate entities and investors prior to acquisitions, joint ventures, mergers, key hires, and other transactions.

Our Due Diligence solutions range from red flag screening through to the most complex investigative due diligence assignments.

Furthermore, our Due Diligence services are tailored to our clients’ needs. We discuss with the client what information is most important for the assignment prior to engaging on the task.

Developing Jurisdictions

Traditional Due Diligence in developed markets is often completed with a focus on risk and less emphasis on transaction intelligence. Gaining accurate, current and direct insight into key reputational, commercial and operational issues is critical. In developing jurisdictions, such as those found in Latin America, the traditional automated Due Diligence approach is insufficient as databases and government repositories are often not mature or complete enough to satisfy the requirement.
Aratus focuses on reputational and third party risks that exist with suppliers, distributors, auditors, politically exposed persons lobbying for the business and many other entities.

In analysing the risks associated with these upstream entities, discreet consultations with carefully selected and well-placed human sources gives Aratus the ability to analyse and stress test the information gathered against a backdrop of publicly available information and regulatory frameworks.

A Staged Approach to Due Diligence

We offer two types of tailored Due Diligence services:

A Level One or Red Flag service – gathering of public information domestically and/or abroad and analysis of the raw data with recommendations.

A Level Two service – gathering of public information domestically and/or abroad and analysis of the raw data with recommendations plus non-public information obtained via discreet contact with human sources.

Deliverables will be discussed and agreed with a client before commencing any assignment.

Typically, our Due Diligence services include, but are not limited to:

  • FCPA, Bribery Act and all other relevant regulatory frameworks.
  • Examination of the reputation, associations, activities, and ethics of potential partners, investors or key hires.
  • Confirmation of allegations and rumours of criminal or questionable business practices.
  • Identification of any undisclosed liabilities or questionable financial reporting.
  • Research of unusual offshore structures and unexplained vehicles associated with potential merger, acquisition, or joint venture targets.
  • Clarification of the nature of the relationships between target companies and various individuals, including government officials – Politically Exposed Persons (PEP).
  • Provide a “lay of the land” for doing a deal, determining powerbases and shifting alliances. We ask: who is well connected and why? Who is on the way out and why? And, which relationships should be cultivated?
  • Information on any irregularities, lack of transparency, or acts of fraud that may have been committed by the opposing party.
  • Regulatory compliance history to uncover any misrepresentations in SEC filings or any other regulatory violations.
  • Identification and examination of potential conflicts of interest among shareholders, board members or senior management.
  • Appearance of, or business relationships with, any entity or person found published on a “prohibited list.” For example, the Treasury Department’s Office of Foreign Asset Control (OFAC).
  • Clarification of the true nature of corporate ownership and control for purposes of preventing conflicts of interest or reducing reputational risk.
    Detection and monitoring of suspicious transactions or fund flows to identify the originator of opaque fund transfers.

During this process, we can also identify and locate critical documents and potential interviewees that make it possible to verify assertions concerning employment, education, net worth, financial leverage, and business reputation and practices.

Investigative Due Diligence

Our Investigative Due Diligence services are bespoke designed to offer the most comprehensive service.