Forensic Due Diligence

Palvelut

Forensic Due Diligence

Forensic Due Diligence helps the parties involved in M&A process to identify risks that are not normally detected in a standard due diligence process. In addition to traditional management interviews and financial data analysis, we also use open local sources and applicable intelligence data as well as forensic data analytic tools to address such matters as uncovering operational deficiencies, assessing reputation and ethical risks.

Forensic due diligence typically focuses on reputation, reliability, non-compliance with legislation, operational practices and risks related to processes. This is not a "one-size-fits-all" due diligence process, instead it is always tailored according to the object of the transaction and the nature of the business.

Forensic due diligence provides an objective review of the target company's operating methods, specific policies, the maturity level of relevant guidelines and processes, and financial data. It is possible to examine the company's operations holistically or focus more closely on a single business-critical process. Each engagement is always carefully tailored according to the profile of the object and the client’s aspirations.

Forensic due diligence report may inter alia include the following entities:

Review of operating methods and processes

The aim is to form an understanding of the target's operational activities and the risks associated with them. In accordance with the client's wishes, we can investigate the operating methods of the target in general or focus on a specific process. We always try to verify the information obtained from management interviews and documentation through additional sources such as data and additional interviews. This enables utilizing information that is not used in a typical due diligence review. In addition, the risks of misconduct related to operating methods and processes, such as corruption, bribery and unethical behavior, are an essential part of the review.

Data analysis of the target's financial data

Financial data analysis typically focuses on transactional data that involves the highest business risks. In addition to transaction data, we can focus the investigation on, e.g., travel and expense reports, payroll data, or data related to gifts and entertainment. We use analytics to process and analyze large amounts of data and identify suspicious transactions. If necessary, we focus the investigation on individual transactions and conduct an analysis of their compliance with the target company's internal guidelines and policies.

Integrity Due Diligence (IDD) Services

In our Integrity Due Diligence (IDD) service, we carry out background checks in the focus area and scope chosen by our client. For example, we focus on the background and activities of the business, the ownership structure, any other corporate affiliations of top management or its representatives, or the sanctions and PEP (politically exposed person) review. Our extensive international network enables us to carry out background checks around the world.

Maturity and readiness assessments

We help our clients to carry out maturity assessments related to the prevention and management of misconduct, bribery and corruption. The purpose of the maturity assessment is to identify the current state of the target’s related practices, risks associated with it and the measures by which the target's operations can be further developed. We utilize international frameworks in our assessments. For example, in cross-border M&A transactions, we can assess the compliance & ethics maturity of the target or its guidelines and measures related to the prevention of bribery and corruption by comparing them to the UK Bribery Act, FCPA or other relevant legislation.

What kind of challenges have our customers faced and how have we solved them?

CASE A

Challenge: As part of the M&A, a French global infrastructure company wanted to determine the maturity of the target company in terms of ethical practices and compliance. The framework for the assessment was the French anti-corruption Sapin II legislation.

Actions: We conducted a focused due diligence review, in which the main focus was on the guidelines and practices concerning the ethicality and compliance of the target. We reviewed all relevant guidelines and policies and compared their maturity with the French Sapin II legislation. Based on the review, we formed a concise report in which we presented the key findings to our client, made comparisons with French legislation and, based on the comparison, made recommendations on the additional measures required.

 

CASE B

Challenge: As part of a possible M&A transaction, our client wished to better understand the processes of the target to be acquired in relation to the recruitment of personnel. The aim of the assignment was to discover details, procedures, roles and responsibilities and the impact of international business on the recruitment process.

Actions: We offered our client a comprehensive Forensic Due Diligence review, in which we investigated, inter alia the following issues:

  • A detailed description of the stages, roles and responsibilities of the recruitment process. We formed a view of the process through management interviews and documentation. In addition, we verified our findings with additional interviews and a review of financial data.
  •  Description of the regulatory framework for the recruitment of employees. We reviewed the regulatory requirements from the point of view of both the countries of origin and Finland.
  •  Analysis of the risks of corruption and misconduct related to the process. With the support of our international network, we investigated the level of corruption and possible risks also in the employees' country of origin. We verified the information obtained by interviewing people outside the company and looking at the financial data.
  •  We conducted local background checks on the key personnel and parties in the process.

CASE C

Challenge: Our client wanted to understand the maturity of the target in the prevention and management of corruption and bribery. The aim was to find out what kind of policies the target has in the prevention and management of corruption and bribery, whether the policies are implemented in practice and whether there are indications of corruption in the target’s operations.

Actions: We conducted a focused ABAC due diligence review, in which the main focus was on determining the target's maturity against corruption and bribery. We looked at the target's anti-corruption and bribery policies as well as financial data. In terms of financial data, we focused on high-risk accounts such as gift and entertainment. We looked at individual transactions and related documents. We made a comparison between the transactions and the policies to find out whether the target's policies are followed in practice and whether there are any indications of possible corruption. As a result, we gave the client clear and concise development measures to prevent corruption and bribery.

Key Contacts

Leea Uusi-Hautamaa

Leea Uusi-Hautamaa

Director

Leea Uusi-Hautamaa johtaa Deloitten Forensic-palveluita. Leea on ammatiltaan lakimies ja varatuomari. Hänellä on pitkä ja monipuolinen kokemus rikosoikeudellisista asioista, väärinkäytösten ja muun ep... Lisää

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