6 ms·

With so many DDs, do you have any pointers or directions for those looking to learn better DD?

jacquesm 5y ago
I wrote a couple of articles about it: https://jacquesmattheij.com/due-diligence-survival-guide/ https://jacquesmattheij.com/due-diligence-survival-guide/ and part II: https://jacquesmattheij.com/due-diligence-survival-guide-part-ii-nuts-and-bolts/ https://jacquesmattheij.com/due-diligence-survival-guide-par... Note that these articles are now about a decade old, I probably should update them to reflect the experience gained since then and changes to the state of the art in tech.
mbesto 5y ago
I'm the other DD guy (besides jacquesm, who btw is very knowledgable) that regularly posts here. Happy to answer any questions. There really isn't any "public" info about tech DDs that I could share. The tech DD world is growing likely crazy so if you have a business and tech mind, you'll likely find companies hiring for roles, even if you don't have specific experience. These are two books that might help you provide perspective on M&A/PE that you would learn if you got into DD: https://www.amazon.com/dp/1973918927/?coliid=IOSLH6YRD3CP6&colid=3BTISQKNUST1G&psc=1&ref_=lv_ov_lig_dp_it https://www.amazon.com/dp/1973918927/?coliid=IOSLH6YRD3CP6&c... https://www.amazon.com/HBR-Guide-Buying-Small-Business-ebook/dp/B01KP33K4Y/ref=sr_1_2?dchild=1&keywords=how+to+buy+a+business&qid=1634668502&s=books&sr=1-2 https://www.amazon.com/HBR-Guide-Buying-Small-Business-ebook... For reference - I've done 250+ DDs myself and my firm has done over 500 over the last 6 years.
- rand846633 5y ago
  > Happy to answer any questions. Assuming the receiver uses a proper offshore construct to accept the payment, this would go by unnoticed by your DD? But most interesting: What is your best guess - Your partner says you find “a hand full” from a few hundred - how many of these cases do you miss because the recipients use a not easy traceable proxy entity to collect the payment? Do you try to uncover such hidden actions, if yes, how? Also, is there a good reason why someone would not use a offshore proxy/holding?
  - jacquesm 5y ago
    > how many of these cases do you miss because the recipients use a not easy traceable proxy entity to collect the payment? That's the 'million dollar question', and in some cases substantially more than one million. I think the reason a good number of these people get caught is (1) things like the Panama papers and other leaks like that have made it harder to do this, and have also brought the not insubstantial resources of the authorities to review these constructs and (2) most people never expect that during DD such a thing would be checked. It's typically quite a surprise when we start asking about the activities of companies that the other party believes are well hidden.
    - rand846633 5y ago
      I don’t see offshore leeks as a big deterrent, unfortunately. The three big ICIJ leaks were not published as in dumped to the public. Only politicians, PEPs, obvious money launderers and some obvious other criminals were selected and exposed. (It’s only money laundering if you can proof the money comes from the proceedings of crime) There are some criminal service industry leaks that are public, or have been public, yet it doesn’t appear more than a few individual have the motivation to follow trough in combing them. At least this is true for groups who would publish on their findings.
      - deleted 5y ago
        [deleted]
      - jacquesm 5y ago
        Fair enough. I go on the assumption that there will always be stuff we miss, and my customers do as well - especially given the time pressure that we are under to deliver. Even so, it's a given that some people will get away with these things. Interesting detail: over the years you'd expect something like this to pop up after the fact or in a subsequent DD if it goes on for long enough, but that has never happened. So maybe the number of missed cases is lower than what I would personally expect it to be (a factor of two would not surprise me).
    - mbesto 5y ago

I wrote a couple of articles about it: https://jacquesmattheij.com/due-diligence-survival-guide/ https://jacquesmattheij.com/due-diligence-survival-guide/ and part II: https://jacquesmattheij.com/due-diligence-survival-guide-part-ii-nuts-and-bolts/ https://jacquesmattheij.com/due-diligence-survival-guide-par... Note that these articles are now about a decade old, I probably should update them to reflect the experience gained since then and changes to the state of the art in tech.

mbesto 5y ago

I'm the other DD guy (besides jacquesm, who btw is very knowledgable) that regularly posts here. Happy to answer any questions. There really isn't any "public" info about tech DDs that I could share. The tech DD world is growing likely crazy so if you have a business and tech mind, you'll likely find companies hiring for roles, even if you don't have specific experience. These are two books that might help you provide perspective on M&A/PE that you would learn if you got into DD: https://www.amazon.com/dp/1973918927/?coliid=IOSLH6YRD3CP6&colid=3BTISQKNUST1G&psc=1&ref_=lv_ov_lig_dp_it https://www.amazon.com/dp/1973918927/?coliid=IOSLH6YRD3CP6&c... https://www.amazon.com/HBR-Guide-Buying-Small-Business-ebook/dp/B01KP33K4Y/ref=sr_1_2?dchild=1&keywords=how+to+buy+a+business&qid=1634668502&s=books&sr=1-2 https://www.amazon.com/HBR-Guide-Buying-Small-Business-ebook... For reference - I've done 250+ DDs myself and my firm has done over 500 over the last 6 years.

rand846633 5y ago
> Happy to answer any questions. Assuming the receiver uses a proper offshore construct to accept the payment, this would go by unnoticed by your DD? But most interesting: What is your best guess - Your partner says you find “a hand full” from a few hundred - how many of these cases do you miss because the recipients use a not easy traceable proxy entity to collect the payment? Do you try to uncover such hidden actions, if yes, how? Also, is there a good reason why someone would not use a offshore proxy/holding?
- jacquesm 5y ago
  > how many of these cases do you miss because the recipients use a not easy traceable proxy entity to collect the payment? That's the 'million dollar question', and in some cases substantially more than one million. I think the reason a good number of these people get caught is (1) things like the Panama papers and other leaks like that have made it harder to do this, and have also brought the not insubstantial resources of the authorities to review these constructs and (2) most people never expect that during DD such a thing would be checked. It's typically quite a surprise when we start asking about the activities of companies that the other party believes are well hidden.
  - rand846633 5y ago
    I don’t see offshore leeks as a big deterrent, unfortunately. The three big ICIJ leaks were not published as in dumped to the public. Only politicians, PEPs, obvious money launderers and some obvious other criminals were selected and exposed. (It’s only money laundering if you can proof the money comes from the proceedings of crime) There are some criminal service industry leaks that are public, or have been public, yet it doesn’t appear more than a few individual have the motivation to follow trough in combing them. At least this is true for groups who would publish on their findings.
    - deleted 5y ago
      [deleted]
    - jacquesm 5y ago
      Fair enough. I go on the assumption that there will always be stuff we miss, and my customers do as well - especially given the time pressure that we are under to deliver. Even so, it's a given that some people will get away with these things. Interesting detail: over the years you'd expect something like this to pop up after the fact or in a subsequent DD if it goes on for long enough, but that has never happened. So maybe the number of missed cases is lower than what I would personally expect it to be (a factor of two would not surprise me).
  - mbesto 5y ago