Eyes wide shut
- India’s GDP to reach $5 trillion by 2025: Top official at World Bank
- Petrol price hit highest level under BJP govt, diesel at record high
- Govt serious in bringing fugitive economic offenders to task: Rajnath Singh
- Sushma Swaraj arrives in China for talks with Wang Yi, SCO meet
- Make the best of technology to deal with administrative delays: Modi tells bureaucrats
Deal makers are usually smart people who are also prone to hubris. The race to close a major deal often leads to hasty due diligence—and legal tangles later on.
Ranbaxy is a good example. An arbitration court last week asked the pharma company’s former promoters to pay $385 million to Daiichi Sankyo. The Japanese company had complained that it had not been told at the time of the deal about the incipient problems with the US regulators. And, in the liquor industry, Diageo hastily took control of United Spirits from Vijay Mallya. It was only later that the buyer got to know of the soft loans given to other struggling companies in the UB group.
These examples show that even global companies walk into attractive deals with their eyes wide shut. Buyers have to be more careful, but that does not exonerate other players in large corporate deals, such as investment bankers, auditors and the board of directors. What were they doing?