Due Diligence or risk analysis
How to handle it in a minority language country
Due diligence
investigation can be life saving in a cross border MA transaction. The trick is
not to overdo it and at the same time to dig out all information relevant to
the transaction. Well, this is how things look from the parties’ perspective.
The performers’ point of view i.e. the
attorneys’ or accountants’, is somewhat different. It is in their billing and
professional interest to suggest a due diligence investigation that is as
thorough as possible. Which carries with it the risk of losing focus and the
due diligence investigation becoming worthless and very expensive.
Finland is a
minority language country meaning that many official documents are drafted in
Finnish. It is a language that is barely known outside of the country. Although
English is well mastered in Finland it does not change the fact that you need
to know Finnish as well. For a transaction a typical solution would be to hire
a local law firm and accountants for the due diligence. The issue is then
handled from a technical perspective assuming that google translation method
would work. Most of us have noticed that it does not. Many reports will be prepared
but the information is not there. The due diligence thus performed did not help
our drafting of agreements.
A solution could
be to include a member of the drafting team in the due diligence team. That
link between the teams should be in a position to make sure that questions of
the drafting team are correctly understood and, also, that answers provided by
the due diligence team can be understood by the drafters. Obviously, in real
life, things would not go this smoothly. Operation of a due diligence team can
be a business secret and, therefore, a new temporary member would not be
welcome.
by Tina
Taivaloja
lecturer, doctoral student at University of Helsinki
