The Concern
A mid-sized lending institution was in the final stages of structuring a substantial credit facility with a new corporate borrower. Read More
What We Did
Scoped it to the deal timeline. A live transaction doesn’t pause for an investigation, so we agreed the scope and priorities with the client up front to fit the deadline it was already working to. Read More
What We Found
A prior regulatory action. One of the holding entities in the ownership chain had been the subject of [a regulatory action / penalty by a financial regulator]. Read More
The Outcome
Terms renegotiated before signing: The client didn’t walk away, but it didn’t sign the deal as originally structured either. Read More
The Concern
A mid-sized lending institution was in the final stages of structuring a substantial credit facility with a new corporate borrower. The borrower had passed the usual financial due diligence, including credit history, financial statements and standard compliance checks, without any issues.
The ownership structure, however, raised a question. The borrowing entity sat beneath [X] layers of holding companies, some registered in different jurisdictions. It wasn’t clear who ultimately controlled the business or who stood behind it financially.
Standard checks confirmed that the borrower’s paperwork was in order. They didn’t confirm who the institution was actually lending to. With the deal close to signing, the client wanted independent verification of the counterparty, without delaying the transaction or alerting the borrower.
What We Did
- Scoped it to the deal timeline. A live transaction doesn’t pause for an investigation, so we agreed the scope and priorities with the client up front to fit the deadline it was already working to.
- Mapped the ownership structure. We traced each holding entity across [X] jurisdictions back to its ultimate beneficial owners.
- Profiled the real decision-makers. We reviewed the backgrounds, business affiliations and track records of the individuals who actually controlled the organisation.
- Checked the full chain. Litigation, regulatory and adverse media records were reviewed for every entity and key individual in the ownership structure, not only the borrowing entity.
- Worked discreetly and reported clearly. The review was carried out without alerting the counterparty. The client received a structured report that kept verified findings separate from matters needing clarification.
What We Found
- A prior regulatory action. One of the holding entities in the ownership chain had been the subject of [a regulatory action / penalty by a financial regulator].
- It hadn’t been disclosed. The borrower hadn’t mentioned it during the deal process.
- Standard checks couldn’t have caught it. The matter was linked to an entity several layers above the borrower, outside the scope of routine financial due diligence.
- It was material, but not disqualifying. On its own, the finding didn’t rule the borrower out. It was, however, significant information the client didn’t have and needed before committing capital.
The Outcome
- Terms renegotiated before signing: The client didn’t walk away, but it didn’t sign the deal as originally structured either. The facility was repriced and restructured to reflect the additional risk.
- Stronger protections: The final agreement included safeguards that weren’t in the original terms, such as [additional security, guarantees from the ultimate owners, and enhanced disclosure and covenant requirements].
- A decision on the client’s terms: The issue came to light before capital was committed. After funding, the client’s options would have been far more limited and far more costly.
- Ongoing visibility: [Optional: Periodic monitoring of the ownership chain was built into the facility’s review cycle.]