Commercial due diligence: looking beyond the first impression | Case studies

Case studies

A banking client had invested through its venture capital arm in a European hi-tech business, which involved several linked companies. The various ventures were in network infrastructure management systems. The entrepreneurs had gained significant publicity for their claim to be market innovators and leaders, emphasising the growth potential of their offer in today’s climate and the consequent profits to be made by investors at each stage of the business expansion.

Commercial due diligence: safeguarding investments

In spite of the apparent initial success, the bank soon found the results to be well below projections and the ventures were losing money. At the same time, management seemed reluctant to communicate details of their structure to the bank and concerns were raised about their business ethics.

Capcon Argen’s brief was to research the organisation. The two principals were found to have combined interests in more than 40 companies involved in similar activities, with many of them sharing business addresses. The main assets were held in entities belonging personally to the principals and the only entities losing money were those in which the bank and others had invested.

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Case studies A banking client had invested through its venture capital arm in a European hi-tech business, which involved several linked companies. The various ventures were in network infrastructure management systems. The entrepreneurs had gained significant publicity for their claim to be market innovators and leaders, emphasising the growth potential of their offer in today’s climate and the consequent profits to be made by investors at each stage of the business expansion.