- Registration time
- Last login
- Online time
- 3338 Hour
- Reading permission
Now that it has been announced that China will form a cash-rich investment company, be extremely careful of scams and traps. There are too many around in the west which would be too happy to sugar-coat and window-dress their accounts, assets, share values, resources and linkages in order to give the appearance of high valuations or to make their companies to be acquired appear to have strategic value. A lot of skeletons in their cupboards are carefully and cunningly kept away from accounting forensics. There will also be con-man tricks played out between seeming competitors in markets who have actually struck deals and pacts with each other to skim money from investment companies, especially when they think socialist money is easy prey.|
The standard of due diligence to be exercised on potential targets for acquisitions or in potential investment portfolios must be higher than before, more professional than the best, more calculated in terms of risk analysis. Otherwise, as one has read about Morita of Sony's acquisition of some of hollywood's movie intellectual properties, or even some japanese purchase of the dutch sunflower painting for megamillions, it's all a fake setup.
There are also problems after the purchase; side-effects on share price, as well as internal integration issues, payout to staff, liabilties hidden from the books, liens and exposures, other-shareholders issues, market-perceptions post-merger/acquisition, client-poaching by competitors, internal-information leaking, technologis that don't really work... etc problems. Some of the acquisitions may also ricochet on foreign state sensitivities (eg temasek singapore on thai satellite). Lastly staff assigned to do due diligence before purchase may also be compromised (read: bought up) to rubberstamp fake accounts or write reports overlooking critical inherent risks in the targets.
Caveat emptor; the investment world out there is full of crocodiles.