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Due diligence and Corporate Governance

by Arthur Kendall

…And the different attitudes of institutional vs private equity investors

A recent case of due diligence scuppering a major acquisition highlights for me one of the core issues of corporate governance (and why corporate governance is important): the separation of ownership and control. But this time I put the spotlight on the investor companies not the businesses being acquired.

 

The amount and depth of due diligence performed will vary depending on whether the company is using other people’s money or its own. While that may seem logical, it should be of concern to investors, just as it should be to shareholders in public companies. Directors are under legal obligation to look after the money entrusted to them, whether via a fund or directly in…

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