The fraud in a business acquisition is often invisible in the data room — because the data room was curated by the seller. The revenue figures were prepared for the sale. The liability disclosures reflect what counsel approved for disclosure. The customer relationships are presented in the most favorable light possible. Standard financial due diligence works from the documents the seller provides. The bureau investigates what those documents don't show.
The business shows $4.2M in ARR with strong retention metrics. Three of the largest accounts are entities controlled by the seller. The contracts are real. The relationships are not arm's-length. Post-close, the accounts churn immediately.
Sales spiked in the 18 months before the sale process began. Distributors received unusually favorable terms. Returns and chargebacks are at the tail end of accounting periods. The revenue is real — it was pulled forward from future periods to inflate the trailing metrics that set the purchase price.
The representations and warranties schedule discloses known litigation. The pending regulatory inquiry that could result in a seven-figure fine was not yet formal — so it was not disclosed. The lease guarantee on a closed location does not appear in the balance sheet as presented. What is not disclosed can be as significant as what is.
The top three customers represent 67% of revenue. Each has a multi-year contract. Two of those customers have already been in contact with the seller about not renewing. The relationships exist on paper. The commitments do not.
Customer contact, contract cross-reference, and payment verification independent of the seller's records. We verify that the revenue is real, that the customers are arm's-length, and that the relationships reflect what the financials represent.
Every security interest and UCC filing against the business and its assets. What creditors have claims against what the buyer is purchasing that do not appear in the deal disclosure.
Comprehensive litigation search including matters not yet formal — regulatory inquiries, demand letters, EEOC charges, and pending disputes that may not require disclosure under the deal's R&W framework but represent material risk.
Every payment from the business to any entity or individual connected to the principals. Above-market compensation, related-party contracts, and loans to owners reveal the real economics of the business.
M&A fraud creates strong civil recovery through representations and warranties breaches, indemnification provisions, and securities misrepresentation claims. The recovery path runs through the acquisition agreement itself — and is strongest when asset identification begins before filing. The bureau identifies the assets against which recovery will be pursued before the legal process begins, preserving options and strengthening positions.
All submissions are confidential. An analyst will respond within 24 hours.
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