External Consultants for DD in Foreign Countries

This topic contains 5 replies, has 6 voices, and was last updated by  Indrama Yusuf Muda Purba 3 months, 1 week ago.

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  • #104448

    Frederick Byrne
    Participant

    When seeking to hire external consultants in a foreign country to assist with DD, how can one ensure their will not be a conflict of interest on the consultant’s part? Is there really any way this risk can be fully mitigated when looking to hire advisers and consultants in a country and market one is not fully familiar with?

    #106566

    You can sign some clausules with them. Also, you should study the consultancy company and see if their trayectory is the correct one.

    #107878

    Korath Wright
    Participant

    Finding the right external experts has a material impact on a project, and can include additional challenges when working remotely, across boarders and through different cultural lenses. For example, what could be interpreted as a final agreement in one culture, maybe considered a stage on the path of negotiation in another culture.

    Aligning incentives with outcomes (and to avoid conflicts of interest) is difficult in any arrangement, however presents unique challenges internationally. Similar techniques can be used to those employed bringing together the buyer, target and specialist accountants (or legal, etc). It is important to understand the level of materiality to be deployed and the areas of concern being undertaken, in order to direct the advisors in various fields and get the results required.

    In addition to references, it is always good, and even more so when working across unfamiliar cultures and regulations, to get multiple opinions initially to form the basis of where to source sound expertise and the required levels of performance.

    #109214

    Andreas Pournos
    Participant

    For classical DD, professionals that perform such engagements are usually following some ethical code for professionals that would provide some assurance that cases of conflict of interest should be properly identified and risk is mitigated (e.g. accountants, lawyers CPA’s etc).
    For other DD areas, certainly you should explicitly include contract clauses in your agreement with regard to confidentiality, breach of independence etc

    #109899

    Tobias
    Participant

    Hiring global companies such as the Big Four certainly helps to mitigate risk. Especially if they have people with your cultural background employed and you require to put them in the DD team. Additionally, your local partner should stay in connection to with manager/partner of your DD project in a foreign country.

    #109930

    This is very important when do DD in the overseas we need external advisor assistance in knowing the target especially with different legal, system, culture etc otherwise the acquirer will be blind and the acquisition could destroy value.
    Especially with MNC that have subsidiaries in different countries in Finance DD, Legal DD, very significant different that we should know to anticipate and mitigate the risk.

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