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Brandlin & Associates News |  |
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Expenses were cut and teams were trimmed to be lean and mean. Now that sales are starting to return for the "survivors," their need for capital is picking up. As investment bankers start hitting the streets instead of the gym, senior, mezz and equity capital sources once again are seeing some good opportunities ... and others that may be too good to be true.
It's a sexy product with a celebrity following. Reported sales and profits were growing rapidly. The company seemed like a great opportunity for an equity investment. Fortunately, the equity firm considering this "opportunity" invested in due diligence before investing in the company. Retained under our standard forensic accounting agreement, we showed up at the company to start work. Within a day, we smelled fraud and alerted our client. They pulled the plug and we went home. For a small fee, the equity firm averted a big headache. Within a few months, the company in question was in bankruptcy and accused of fraud by its senior lender. What's the moral of the story? The age-old adage, courtesy of Benjamin Franklin: An ounce of prevention is worth a pound of cure.
What about the senior lender caught up in the fraud that the equity firm avoided? Time is of the essence. In these situations, the facts behind the financial statements and related reports need to be assessed as quickly as possible. If a company in your porfolio smells fishy, give us a call at 310-789-1777 or email jeff@brandlin.com. We would be happy to discuss areas to consider to help you navigate your next steps, such as:
Brandlin & Associates is an exclusive provider of accounting due diligence, financial consulting and strategic consulting services. We pride ourselves on offering superior technical expertise, years of practical experience and unparalleled service to decipher financial and operational performance metrics. As a result, our clients are able to make informed decisions in a timely manner. |
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