These famous cases certainly teach us all the importance of due diligence when it comes to business….
Due diligence is a phrase we often hear a lot about when it comes to business deals and cases. It’s easy to see why – when you’re getting involved in a business situation that can affect a large amount of people, there are lots of jobs at stake, and huge amounts of money are at risk, it’s highly likely (and very good sense) that you would want to know every last detail about the person or company you are about to do business with. Having one of our team here at Global Investigations conduct thorough due diligence would be an excellent way of making sure that happens.
So it’s always incredibly baffling to hear about cases involving large, famous companies that have gone terribly wrong – and that it all could have been avoided if someone within the ranks had the foresight to conduct some due diligence! It’s bizarre that it so often gets forgotten by these major companies, and there are some famous cases that highlight just how important conducting due diligence really is.
In these five high profile cases, had due diligence been taken seriously, we’re sure the outcomes would have been very different….
In 2012, computer giants Hewlett-Packard revealed their plans to move away from producing computer to computer hardware by buying software company Autonomy. Unfortunately, during the process their major lack of due diligence led to the oversight of many income statements, cash flows and balance sheets – and as a result, HP ended up being sued in federal court for negligence, leading to a loss of around $5bn
Back in the 1990s, Quaker Oats announced that they were acquiring drinks company Snapple; although they neglected to undertake any competitive analysis or look into the intellectual property rights that came along with the deal. As a result Quaker suffered a disaster and ended up losing $2 million a day for each day they owned Snapple – you can see why the union didn’t last very long.
Rupert Murdoch’s News Corporation had grand plans to include social network MySpace under their umbrella back in 2005, when the site was at the height of its popularity. As a result of their lack of due diligence, the deal fell through spectacularly, and cost News Corporation nearly $500 million in losses.
Mattel are a world renowned toy company, and in the late 1990s they wanted to move into the emerging interactive market by acquiring The Learning Company who made educational online games. However, Mattel didn’t bother with due diligence and so didn’t realise The Learning Company was actually projecting dismal sales expectations that would make their acquisition almost worthless. They ended up selling The Learning Company less than a year later, at a major loss.
BMW bought fellow car manufacturers Rover for a huge sum in 1994 – without checking or questioning the financial information they’d been given, which of course turned out to be inaccurate. BMW had to admit defeat and also lost over $700 million when they had to sell Rover on again after barely any time at all.
After reading about these cases, we’re sure you will all always be extra cautious when it comes to business deals from now on, and make certain you’ve asked one of our agents here at Global Investigations to conduct due diligence on your behalf. Don’t end up like these companies; learn from their mistakes! If you would like our team to carry out due diligence, please contact us, and we’ll be more than happy to help.
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