The Olive Trees in Europe 3 – Why Europe? The Importance of Due Diligence

Already entering the third month here in Italy, I observe that many friends and businesses have an interest in maintaining a professional relationship in another country, starting a new business or setting up a base of support for distribution, service disclosure or existing product in Brazil. For the most part, there is not much idea where to start, even in well-established companies.

This is, literally, a new and unknown terrain. With this, all the uncertainties and challenges are embedded in this new endeavor. Crossing the Atlantic to present their product to new markets, there is the taste of entrepreneurship. This entrepreneurial look for Europe has a gigantic meaning. At first, there is the obvious question of status, marketing or just personal satisfaction. Soon after, comes the strategic positioning in the business world, in a consolidated market, of high quality and valued currency.

Whatever the motivation to start the business (in any location), there is the importance of Due Diligence, which is nothing more than deepening in much more detail in the concrete project that is intended to invest. Whether in Brazil or Italy, besides the technical aspects of the viability of the business itself, it is also necessary to observe the financial, legal, environmental, etc. health of a company that is being acquired. Abroad, due to the obvious characteristics that differ culturally, there is also the need to understand the new territory even more comprehensively, basing the technical, financial and legal analyzes with the customs and tradition of the new locality.

In a concrete example in this brief period, I have had the experience of monitoring the feasibility of opening a hotel to a specific investor in a small (and wonderful) city in northern Italy. Due Diligence, which is these investigative acts before a business operation, was interrupted early in the investigation. A purely technical analysis could take time to verify the risk of the business, since the property in question had a good structure, a good offer of acquisition or partnership, privileged location in a city chosen among the most beautiful in the country and little competition. But, this close contact with the local showed me a reality (not apparent) that showed by local indicators somewhat peculiar that the investor would take to have the return of his investment.

Even with the investment not materializing, and the project was timely aborted early on, this Due Diligence fulfilled its function, which is to demonstrate the most crystalline scenario possible to the investor not to be taken by surprise in some negative detail.

A punctual setback like this, coupled with the other analyzes that the case presented, instead of dismissing the interest, only increased the desire to know more and to continue the plans and looks to the inexhaustible European world.

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