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Due Diligence

ECI fully understands that risk and fraud are not always obvious. Proper due diligence services provided by ECI support the financial and business exploration and details behind the targeted company/entity to help you become fully informed about the target’s financials, business model, internal systems, profitability, key operational data, relationships, and as many or as few of the other material factors that will assist you in making an informed decision about your investment. ECI’s experts develop a strategic due diligence scope of work designed to protect your interests by providing objective and reliable information on the targeted entity before you sign on the dotted line. It is estimated that approximately 20% of transactions fall through once strategic due diligence services are begun due to the nature of the information uncovered in the process. This percentage can be much higher depending on the country where the targeted entity is physically and financially located.

Due diligence may be defined as the collection, verification, analysis, and assessment of information about the operations and management of a company undertaken by a potential purchaser or investor. Due diligence aims to confirm that the purchaser or investor has an accurate picture of the target company and to identify risks and benefits associated with the prospective deal. Due diligence normally starts after the signing of a letter of intent by both parties and information disclosed during the process is normally protected by the signing of a confidentiality agreement. Due diligence often leads on to negotiations on the detailed terms of the agreement. The process may cover the financial, legal, commercial, technical, cultural, and environmental aspects of the organization's operations as well as its assets and liabilities, and may be conducted with the assistance of professional advisers.

ECI has experts versed in virtually all industrial processes and these experts routinely assess facilities for compliance with appropriate regulations and client policies. ECI provides cost estimates and the identification of issues related to equipment and processes that may require up-grades/modifications shortly after or before acquisition.

ECI has assisted a number of clients perform strategic due diligence for facilities that our clients intended to purchase in United States, Peru, Venezuela, and China. ECI personnel have traveled with client CEOs and CFOs to various countries and locations to perform this due diligence. ECI has personnel in China that are expert in these types of transactions and information/data gathering. ECI’s experienced personnel have assisted in obtaining appropriate permits and have designed and managed the installation of various equipment and processes to comply with country & local agency and client requirements.

ECI will assist your company in the following areas:

  • Working with the governments of China, virtually all industry/companies are owned by the government, lack of transparency favors all things in China and ECI personnel (both here in the US and in China) are very knowledgeable of this issue and how to deal with all situations;
  • Negotiations, ECI fully understands that nothing in China is what it seems and has assisted numerous clients with in depth investigations in China;
  • Plant design, permitting, and construction; ECI has experienced personnel to successfully construct and provide manufacturing operations support to our clients;
  • Business development and management, project management, and assistance with products and equipment introduction and installation in China;
  • Monitoring the quality of products produced in China and making sure that your manufacturing facility in China does not compete with you or introduce products into your distribution chain;
  • Human Resource Management (HRM), hiring the correct personnel is a key to making any organization work. ECI has significant experience in China with HRM activities; and
  • Marketing, ECI has significant marketing and sales experience in China and has set up manufactures representative networks for US based companies.

ECI accompanied a CEO and technical support staff of a $50 million company to Hangzhou for the potential purchase of a local Chinese company. ECI personnel assembled in Hangzhou to provide investigation, negotiations, and translation support for the US based company. ECI’s personnel attended an evening banquet and the following day visited two (2) two manufacturing plant sites that were potentially for sale to the US based company. ECI’s investigative report dated January, 2006 indicated a number of potential issues including a problem that has cost a French company, Danone over $100 million as reported by the Wall Street Journal, see article dated June 8, 2007. As a result of ECI’s investigative report the CEO decided not to purchase or partner with the Hangzhou based company and avoiding the problems that Danone discovered more than one year after ECI delivered the investigative report to the CEO.

 

 

 

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