Bank Post-Financing Due Diligence

Outcome: Disclosed hidden $2 million discrepancy resulting in favorable re-financing

A bank engaged a national accounting firm to conduct a due diligence of a printing company in advance of a $20 million financing. The accounting firm’s review did not uncover any problems.  Two months after the financing was placed, one of the printing facilities reported negative inventory adjustments. We were retained and visited the facility under a cover story of evaluating year-end projections.  We identified a consultant hired by the printing company prior to the financing who when questioned revealed that he informed the company of inventory discrepancies totaling $2.6 million. Client successfully renegotiated the terms of the financing.