I haven't said anything with certainty, ash. I've given my opinions based on my understanding of the situation (I discussed the situation with WTG's legal counsel a while back and formed my views partly as a result. I was a partner in one of the well known accounting firms (it's just a fact and it might be relevant to some who don't know where I'm coming from).
The 'caveat emptor' principle is important because it's what generally applies. If you're given access, you should look deep. It isn't for the vendor to tell you where to go looking and you wouldn't expect him to. If you're selling a house, do you say to a potential buyer: "look up there - it's a bit damp because the gutter needs replacing - it pours in when it rains hard". No. You give access for inspection and you allow the buyer to appoint a surveyor. If he doesn't, then it's his (or her) problem and the risk is theirs. If on the other hand you are specifically asked if you've ever had damp problems and you say: "no I haven't", having painted over the affected areas in advance of sale - then you have misrepresented the position (that's too polite - you've lied) so it's a different matter and the buyer would have a legitimate claim against you for the property. As to whether the claim was successful, that would depend on the 'facts' as presented to a court and the court's assessment of the position.
In this case, my guess is that a lot of things could be put forward as reasons why this acquisition appears to have failed (so far at least), not least:
1 The price SGH agreed to pay
2 The way the negotiations were handled
3 The due diligence work that was carried out
4 A lack of understanding of how the acquired businesses really worked
5 Failure to motivate key personnel following the acquisition
6 Failure to motivate anyone else after acquisition
7 Failure to capitalise on existing opportunities previous management had identified but the new owners missed or allowed to pass
8 George Osborne proposing to change the quantum of claims made in the small claims division
9 Early (and unnecessary) adoption of AASB18
I haven't done much digging but the following doesn't suggest to me that top brass in AU (who should have been watching the UK ops like hawks from day 1) felt the named person had done a particularly good job - I might be wrong............
http://www.legalweek.com/sites/lega...s-four-offices-close/?slreturn=20160819192236
Proving:
1 That misrepresentations were made and
2 That such misrepresentations meant the business was overvalued
is notoriously difficult because of the burden of proof and - even if proved - the difficulties in demonstrating that whatever was said had a material effect on what was paid.
At all times SGH was aware of the problems within QPP and that PwC was carrying out a detailed investigation of the accounting position at exactly the same time E&Y & SGH were carrying out due diligence. I have no doubt SGH/E&Y were give access to PwC's findings, which SGH referred to when saying they had relied on their own work and applied their own accounting policies to the numbers they anticipated making - as well as getting 70 of their own lawyers to crawl all over 8000 cases they'd chosen across the whole spectrum, geographically and by practice area.
SGH was obliged to disclose 'warranty events' as soon as they were discovered, yet to date had not notified WTG of any such events. What exactly has now come to light 3 sets of accounts later that so affected what they paid for PSD?
Might it be than in less than 2 months their chance to lay their hands on money sitting in escrow somewhere disappears for ever and such is their need for cash that they think it's worth the risk (believe me, there's a lot of risk if the claims are frivolous).
I don't want to comment further on the matter. All the above is only as I see it. People are free to think what they like. As I've said, I'm now looking to reduce my exposure here. I am not proposing to use the proceeds to increase my holding in WTG however. I will probably remove the money from the markets as I'm fed up with being cheated out of it by greedy, incompetent (and economical with the truth) directors plus a whole lot of spivs with the moral compass of a hyena, allowed to do whatever they like courtesy of governments that could give a toss about the demise of private investors as long as their tax take is increased. Did I mention beny pensions providers (called 'institutional investors') who lend your shares to the hyenas to use as weapons against you. Oh, and internet brokers who have shed-loads of your shares sitting in nominee accounts under their control (not making them any money), which they swear they would NEVER lend to anyone.
How come when I first invested here 16% of the shares were sold short when only 11% were in the recorded ownership of institutions. And those were only the ones that were disclosed and not all institutions will have been lenders. It had to be internet brokers. My mistake was in failing to appreciate how many times your shares (ie the ones lent and borrowed without your knowledge or permission) would be churned and reloaded. More than the company's entire share capital were traded in just four sessions at the end of Nov 15 and more or less the same thing happened again in Feb or March 16 - can't be bothered to check. All I know is that it's crooked but neither the ASX nor the Au Govt cares. In fact they probably like it. It's even worse in the UK.
I haven't checked for typos/grammar - you'll have to forgive me.
all imho - dyor
