When acquiring a new business or evaluating a potential partner, it is critical to understand the risk posture and performance of the target acquisition or partner. Key questions include:

• How much fraud does the business currently have?
  • How might these observations affect sales and profitability (current an future)?
  • Is the business “hiding” fraud losses to make sales or profits look higher?
• What are the key vulnerabilities of the business?
• What are key industry trends that might affect the value or risk posture of the business?
• How effective are their current risk management practices?
• If the company is acquired, what work might the acquirer need to do to align the target’s operations with the acquirer’s operations and/or bring the target’s performance levels up to the acquirer’s standards or best practice standards?
• How might the target create advantages for the acquirer?
• Is the target’s business viability at risk due to high risk practices or industry dynamics?

Benefits

Effective management of payment and risk operations can have a significant impact on business value and in some cases may influence overall business viability. Understanding the vulnerabilities of a potential target and the quality of the target’s risk management operations can help the acquirer make an informed choice, arrive at an appropriate valuation, and jump-start an integration program.

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