Javice interfered in due diligence in a very sophisticated way. JPMC tried to verify user data but Javice claimed they couldn't provide user personal information "due to privacy concerns". In the end Javice was able to convince due diligence team by engaging in multiple layers of fraud. Sure due diligence team could've done a better job, but Javice was a sophisticated adversary. It's not like due diligence team didn't have any concerns. But they wanted to balance their concerns against possibility of passing a good deal due to formality.
> JPMC tried to verify user data but Javice claimed they couldn't provide user personal information "due to privacy concerns".
DD guy here. This is the most plausible explanation.
When you're under LOI there is a lot of back and forth, which ultimately guide how the purchase agreement gets formulated. So if this was the case, then they would have made the trade off of "ok she's not letting us see the list, but we'll make sure the SPA is ironclad about this". Ultimately deals then get some money locked into escrow or RWI to soften the blow of the cost implication.
At the end of the day, let's say you're JPMC and the company that you acquired did exactly what Javice did. You have an SPA that binds you legally (meaning, if they caught lying post close, they'll get sued), how on earth would you think someone was dumb enough to try to get through diligence, then operate the company post close, and NOT expect to be found committing fraud.
In a comment you won't see unless you have "show dead" enabled, he says:
DD = due diligence
LOI = letter of intent
SPA = stock purchase agreement
RWI = reps & warranties insurance
That was in answer to someone earlier asking about those acronyms, but in a rude way that got their comment flagged to death, which also hides replies. I tried vouching for it to revive it so people could see the reply with that explained the acronyms, but it did not help.
I think the author is just talking like they normally do.
There is generally a lot of jargon and acronyms used here. All the time. Just that most of it is regarding programming/development, so people don't notice it.
Also, even if they were spelled out, you'd still need to google the term to understand what it means. I.e., LOI and "Letter of Intent" are still just tokens that represent a concept.
“ Javice claimed they couldn't provide user personal information "due to privacy concerns””
That’s pretty much what Theranos did. The due diligence people walked away and threw a few hundred million more at Theranos. That’s compares to the due diligence we went through when I worked at a small startup years ago. It was only for a few million but they made us go through hell with all their information request.
Seems if you want to commit fraud it’s best to go really big. The bigger you are the less scrutiny and less consequences.
> That’s compares to the due diligence we went through when I worked at a small startup years ago. It was only for a few million but they made us go through hell with all their information request.
I went through this as an exec at a startup for a deal in the "few 10's of millions" range and the level of effort for the due diligence process was astounding. I'm pretty sure that by the end of the process, the acquiring company knew more about us than we did ourselves.
Isn't it more likely that it's just the bigger the fraud the more likely we are to hear about it, whereas even if 50% of deals the size you went through turned out fraudulent most of them wouldn't make the news and the ones that did might still not make the front page of HN?
