DUE DILIGENCE

An important cause of poor investment decisions is inadequate or inappropriate due diligence. When making a significant investment, we believe that it is essential to obtain an independent evaluation of the business and moral reputation of local stakeholders.

Through our network of active business contacts, TLA is able to appraise the integrity and track record of potential partners. In our experience, this approach is more effective than retaining large accounting firms to review historic financial statements or hiring expensive global investigation firms.

Failing to know your counterparty can be hugely costly. TLA has been called on to rescue investments that went dramatically wrong, but that could have been avoided by a simple telephone call to a qualified source. Knowing whom to contact is the key. Relying on references provided by interested parties is extremely risky and can lead to poor decision-making.

TLA has the experience to steer investors clear of costly mistakes. We have run businesses throughout Latin America and understand that the best way to avoid future problems is to understand the local market, appraise the risks properly and establish an adequate corporate structure and safeguards.

M&A

Using our extensive network, TLA has identified many attractive investment opportunities for new investors in Latin America. Such investments are often in niche business sectors where a foreign investor can add value through global knowledge, as well as with financial resources. We promote investments in situations where we believe the political and economic environment is stable and the legal system affords a strong degree of transparency.

TLA has successfully introduced investors to diverse projects in Uruguay, including a caviar farm, a luxury retirement home and an exclusive coastal real estate project. Again, local knowledge and contacts in both the private and public sectors enabled our investors to appraise the risks fully and know their local partners.

Establishing new corporate entities

A lack of local knowledge can bring dire consequences to investors establishing new companies or entering into joint ventures with local partners. Blinded by red tape and a myriad of local and federal taxes, there is a temptation to rely on cutting corners in order to get the deal done.

Understanding how the local tax and legal system works in practice is essential. As an example, investors can buy into local companies with substantial tax assets on their Balance Sheets, however, these can prove worthless in a system that is less than transparent. Foreign investors establishing new companies will have to obey the rules, but often find that local competition is far less compliant.

Even where new laws have been constituted to protect the rights of foreign stakeholders faced with financial difficulties with their investments, implementation of the law can be unpredictable due to poorly trained judges and suspect local practices. Regional differences can be pronounced. Brazil provides a good example of such shortcomings (please refer to ARTICLE).

To avoid disappointments, reliable local knowledge is vital. TLA is an established firm who you can trust to get things done correctly.