Aon M&A Solutions

1. Aon M&A Solutions An introduction to Corporate Investigative Solutions (CIS) for the Hungarian Venture Capital and Private Equity Association David Shapiro 24 May 2012

2. Contents Page 3 Page 4 Page 5 Page 6 Page 7 Page 16 Page 17 • What is Corporate Investigative Intelligence? • 2. Common applications • 3. Key benefits • 4. Triggers for use • 5. Case studies (PE x 3, Corporate x 3, Lawyer x 3) • 6. What does it cost? • 7. Additional information • Next steps Page 18 • Useful contacts Page 19 Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

3. 1. What is Corporate Investigative Intelligence? • Corporate Investigative Intelligence is the assimilation and correlation of information and data by investigative experts who present findings as due diligence • Acting like a directed microscope, it is used to help executives focus on precise risks three of the biggest being; - New business partners / unproven talent (including JVs and new hires) - Cross-border compliance - Brand and balance sheet protection associated with growing into new territories / markets Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

4. 2. Common applications for Corporate Investigative Intelligence • Corporate Investigative Intelligence can be used to help clients confront multiple issues • Aon’s top 30 are listed opposite • Intelligence ranges from red flag reports and rapid investigations, through to prolonged investigations over successive months Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

5. 3. Key benefits of Corporate Investigative Intelligence • Better safeguarding of your organisation’s physical and information assets • Enhanced operational safety and security (background screening highlights misdemeanours and allegations) • De-risks growth strategy • Builds trust within the organisation • Management board and every person with operating and fiduciary responsibility can be seen to employ best practice Few things can be more costly than hiring the wrong person to lead / deliver growth, or doing business with an unsuitable partner. The benefits of carrying out investigative due diligence include; Operational Reputational Financial • Protects the organisation from charges of neglect of duty or inadequate compliance • Reduces chance of significant costs / penalties • Demonstrates proper due diligence • Can reduce the likelihood of a ‘push’ into new markets / territories failing owing to poor leadership / judgment • Can reduce the need for litigation and the pursuit of damages • Hire the most appropriate candidate / select the most ideal employee / business partner first time • Protects the reputation of the organisation • Maintains market and shareholder confidence in management board Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

6. 4. Triggers for use • Intelligence evaluating board candidates and non-executives • Background checks and intelligence on senior managers given operational or fiduciary responsibility • Full screening and reputational checks on potential M&A acquisition bolt-on management teams • Supply chain or JV screening • Group compliance audits and investigations • Internal investigations (security, IP etc) • Pursuit of assets and litigation Top priorities differ slightly between client types but can be summarised based on demand over the last five years; Corporate M&A executives Private equity professionals In-house corporate counsel and lawyers • Fraud and internal investigations • Financial investigations • Asset searches and recovery • Misuse or abuse of IP • Key witness research • Takeover and corporate defence • Background checks and screening on behalf of portfolio CEOs • Professional, reputational and achievement checks on potential investment targets (whole management teams) • Supply chain of JV partners – especially overseas or in territories where cultural and financial risk is different and could undermine customer or investor confidence Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

7. 5. Case studies – private equity Countries where Aon has investigated (last 18 months) WesternEurope AsiaPac Belgium Australia Finland China France India Germany Indonesia Holland Malaysia Norway New Zealand Spain Sweden Canada Switzerland North America United Kingdom Sectors CEE Agribusiness Czech Republic Aviation Poland Banking Romania Business Services Russian federation Construction Turkey Entertainment Ukraine Financial Services Food & drink Latin America Healthcare Argentina Marine Brazil Media Mexico Pharmaceuticals Retail Technology Telecoms Utilities / Energy • Client: Private equity • Brief: Investment opportunity screening • Region: Czech Republic • Sector: Energy A private equity client was considering a new investment and required intelligence on the asset and its management team.  Aon’s CIS team conducted discreet interviews with industry sources, business journalists and individuals with intimate knowledge of the company. These revealed the company had a “de facto” head who, while holding no official position with the company, ran the company in place of its official CEO. Additional inquiries revealed he was difficult to work with, had encouraged the company to back out of several business deals and had failed to communicate with several company suppliers. Further interviews reported that a second executive was affiliated with a well-known head of organised crime and that this executive had co-founded more than 30 entities. The private equity client withdrew their investment plans, avoiding serious reputational damage and possible criminal and civil penalties Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

8. 5. Case studies – private equity Countries where Aon has investigated (last 18 months) WesternEurope AsiaPac Belgium Australia Finland China France India Germany Indonesia Holland Malaysia Norway New Zealand Spain Sweden Canada Switzerland North America United Kingdom Sectors CEE Agribusiness Czech Republic Aviation Poland Banking Romania Business Services Russian federation Construction Turkey Entertainment Ukraine Financial Services Food & drink Latin America Healthcare Argentina Marine Brazil Media Mexico Pharmaceuticals Retail Technology Telecoms Utilities / Energy • Client: Private equity • Brief: Potential JV partner evaluation • Region: Bangladesh and North America A private equity client required intelligence on two company executives based in Bangladesh and the US. Aon’s CIS team reviewed litigation, business, property and other records in additional to contacting current and former employers of the executive based in Bangladesh. He was revealed to have built a university there, engaging a major international for-profit operator to oversee the project. The relationship ended by mutual agreement for undisclosed reasons two months prior to its opening. He was named in a legal case involving payoffs to various business partners involved in the construction, but denied the charges and no listings of damages paid were found. His wife was identified in separate legal case regarding the use of selling cosmetics and other products independently to those involved in the construction and proposed new faculty. This was a possible conflict of interest. The second executive based in the US was found to have overstated his role with his current employer. Although providing a glowing reference, the employer confirmed the executive was an employee and not a partner. The executive had also overstated his involvement in law enforcement in Bangladesh. During his divorce case in Utah, he submitted documents to the court stating he did not have any community or separate assets or properties, but did not reveal he owned several properties in Idaho and vacation rental property in the Netherland Antilles worth more than $2 million. One of his companies was found to have been suspended by the Utah Franchise Tax Board. As a result of these findings, the private equity client decided not to proceed with either partner in order to avoid potential financial risk safeguard the reputation of the portfolio company Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

9. 5. Case studies – private equity Countries where Aon has investigated (last 18 months) WesternEurope AsiaPac Belgium Australia Finland China France India Germany Indonesia Holland Malaysia Norway New Zealand Spain Sweden Canada Switzerland North America United Kingdom Sectors CEE Agribusiness Czech Republic Aviation Poland Banking Romania Business Services Russian federation Construction Turkey Entertainment Ukraine Financial Services Food & drink Latin America Healthcare Argentina Marine Brazil Media Mexico Pharmaceuticals Retail Technology Telecoms Utilities / Energy • Client: Private equity • Brief: Senior portfolio hire • Region: North America  A private equity client required background character screening and professional achievement information on a senior candidate. They wanted to establish if there was anything they should know which might affect the candidate’s ability to perform and the quality of their decision making before making a formal offer. Aon’s CIS team conducted a discreet investigation including extensive online and on-site research in Arkansas, Wyoming, and Florida, where the candidate had reported addresses. The team also sought to confirm education and professional histories and achievements by reviewing company directories, public and proprietary databases and follow up investigation work in to links uncovered with entities not previously known. The investigative intelligence did not identify any allegations of wrongdoing against the senior hire candidate.  No Federal or Civil Litigation was found and claims and achievements made by the candidate were found to be accurate. As a result, the private equity client hired the candidate as a portfolio company CEO with confidence. Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

10. 5. Case studies - corporate Countries where Aon has investigated (last 18 months) WesternEurope AsiaPac Belgium Australia Finland China France India Germany Indonesia Holland Malaysia Norway New Zealand Spain Sweden Canada Switzerland North America United Kingdom Sectors CEE Agribusiness Czech Republic Aviation Poland Banking Romania Business Services Russian federation Construction Turkey Entertainment Ukraine Financial Services Food & drink Latin America Healthcare Argentina Marine Brazil Media Mexico Pharmaceuticals Retail Technology Telecoms Utilities / Energy • Client: Corporate • Brief: Compliance investigation • Region: 5 countries within Europe • Sector: Financial Services A corporate client was concerned about group compliance with the Foreign Corrupt Practices Act (FCPA). The client wanted to ensure the businesses across the group were not in violation of the FCPA in each of their respective countries. Aon’s CIS team conducted a detailed investigation into the background of vendors and key employees located in several countries. They worked with the client’s legal representatives and the Associate General Counsel’s office.  In particular, they focused on identifying undisclosed relationships with politically exposed persons and evidence of possible prior violations. Aon’s team reviewed the corporate client’s engagement and payment systems and methodology to confirm compliance. The information collected was presented to the US Department of Justice and Securities and Exchange Commission as requested. The management board’s concerns over compliance were dealt with and various illicit payments and payment transactions that could be construed as a violation of the FCPA were uncovered together with recommendations to help avoid more significant violations and potential criminal and civil penalties. Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

11. 5. Case studies - corporate Countries where Aon has investigated (last 18 months) WesternEurope AsiaPac Belgium Australia Finland China France India Germany Indonesia Holland Malaysia Norway New Zealand Spain Sweden Canada Switzerland North America United Kingdom Sectors CEE Agribusiness Czech Republic Aviation Poland Banking Romania Business Services Russian federation Construction Turkey Entertainment Ukraine Financial Services Food & drink Latin America Healthcare Argentina Marine Brazil Media Mexico Pharmaceuticals Retail Technology Telecoms Utilities / Energy • Client: Corporate • Brief: Board appointee • Region: Sweden • Sector: Telecommunications A corporate client had shortlisted 13 potential board candidates but required intelligence to complete their selection. Aon’s CIS team conducted investigative background and professional history checks on each candidate. Research and investigative intelligence included, but were not limited to, examination of litigation records, Securities and Exchange Commission filings, regulatory documents, business filings, judgments and liens, and media / internet reports. The findings highlighted securities class action litigation pertaining to allegations of false and misleading statements made to the investing public, and overstatement of financial performance. The reports prepared by Aon’s CIS team enabled the corporate client to make informed decisions when selecting board candidates. Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

12. 5. Case studies - corporate Countries where Aon has investigated (last 18 months) WesternEurope AsiaPac Belgium Australia Finland China France India Germany Indonesia Holland Malaysia Norway New Zealand Spain Sweden Canada Switzerland North America United Kingdom Sectors CEE Agribusiness Czech Republic Aviation Poland Banking Romania Business Services Russian federation Construction Turkey Entertainment Ukraine Financial Services Food & drink Latin America Healthcare Argentina Marine Brazil Media Mexico Pharmaceuticals Retail Technology Telecoms Utilities / Energy • Client: Corporate • Brief: Overseas investment opportunity • Region: Singapore • Sector: Financial Services A corporate client required intelligence and background screening on a company and its management team prior to making a strategic M&A decision. Aon’s CIS team conducted discreet searches and investigations using the public records of target, information from the Supreme Court of Singapore, Singapore Law Watch, bankruptcy cases, the Corrupt Practice Investigation Bureau, and the Singapore Police Department. English and Chinese language news sources, trade publications, and related information was also researched using multiple public and proprietary databases including major local and international media channels to independently validate the target firm’s reputation. The investigation revealed that nothing was amiss. Aon’s team confirmed the M&A target company was owned by the persons stated and that no civil litigation, bankruptcy actions, or regulatory matters or sanctions were found naming the company as a party. The target had minimal media and internet coverage with no adverse information identified. Armed with detailed company and management team intelligence, the corporate client completed their intended M&A strategy with renewed confidence. Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

13. 5. Case studies – law firm Areas where Aon has investigated (last 18 months) WesternEurope AsiaPac Belgium Australia Finland China France India Germany Indonesia Holland Malaysia Norway New Zealand Spain Sweden Canada Switzerland North America United Kingdom Practice Areas CEE Antitrust Czech Republic Asset Search Poland Banking Romania Capital Markets Russian Federation Dispute Resolution Turkey Employment Ukraine IP Litigation Support Latin America M&A Argentina Regulation Brazil Tax Mexico White Collar Crime • Client: Law firm • Brief: Corporate investigation • Region: Russian Federation • Sector: Real Estate A law firm required Aon’s investigative corporate intelligence on a Real Estate developer and its executives. Aon’s investigation revealed the developer’s international credit ratings were on negative watch status due to concerns regarding its short-term liquidity position, and that several discrepancies regarding the company’s profits had been identified in local media. The investigation also revealed politicians connected to the company’s upcoming billion-dollar real estate project were embroiled in a scandal and that Russian environmental authorities were reportedly investigating companies involved in a second project headed by the developer for dumping waste into a nearby river. As a result of Aon’s findings, the law firm was able to report back to its client that political, financial, operational and reputational risk needed to be considered with regard to the developer. Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

14. 5. Case studies – law firm Areas where Aon has investigated (last 18 months) WesternEurope AsiaPac Belgium Australia Finland China France India Germany Indonesia Holland Malaysia Norway New Zealand Spain Sweden Canada Switzerland North America United Kingdom Practice Areas CEE Antitrust Czech Republic Asset Search Poland Banking Romania Capital Markets Russian Federation Dispute Resolution Turkey Employment Ukraine IP Litigation Support Latin America M&A Argentina Regulation Brazil Tax Mexico White Collar Crime • Client: Law firm • Brief: Asset Search • Region: Eastern and Western Europe • Sector: Finance A law firm sought help identifying the assets of a business owner on behalf of a client, in the hope of recouping loans. Aon’s CIS team was retained by this firm to identify the assets and liabilities of the business owner. Their client, a financial institution, had loaned over $15 million to the business owner's companies. Several of these had subsequently filed for bankruptcy. The business owner was accused in media reports of mixing his personal and business interests and plundering millions of dollars from his companies prior to their filing for bankruptcy. He was reportedly under federal investigation. Fearing they would recoup little of their loan, the firm’s client sought a judgment against the business owner. Aon’s CIS team revealed the business owner was linked to numerous additional business entities, trusts and properties worth millions of dollars, and had personal property including ships and aircraft. This information assisted the firm and their client in their pursuit of judgment. Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

15. 5. Case studies – law firm Areas where Aon has investigated (last 18 months) WesternEurope AsiaPac Belgium Australia Finland China France India Germany Indonesia Holland Malaysia Norway New Zealand Spain Sweden Canada Switzerland North America United Kingdom Practice Areas CEE Antitrust Czech Republic Asset Search Poland Banking Romania Capital Markets Russian Federation Dispute Resolution Turkey Employment Ukraine IP Litigation Support Latin America M&A Argentina Regulation Brazil Tax Mexico White Collar Crime • Client: Law firm • Brief: Senior Partner Screening • Region: North America • Sector: Legal A legal client required detailed background and professional screening ahead of making a Partner offer. Aon’s CIS team conducted regulatory and legal research on the candidate’s career history in Maryland, North Carolina and South Carolina, where they had practiced law for another firm. A investigative review of cases involving the candidate Partner found numerous court related violations including multiple complaints from the Durham County, NC, Bar Association in which the candidate was found to have been named by former clients and judges to be “unprofessional and unworthy” in her demeanour and treatment of clients and officers of the court. Furthermore, the candidate had significant violations of conduct in three courts in Maryland and South Carolina. One of the founding partners of the firm where the candidate had previously worked was involved in a significant divorce settlement one year after they hired the candidate Partner.  Reviews of court records of the divorce proceedings named the candidate Partner as a person of interest to counsel representing the divorcee’s wife.   As a result of the information uncovered and investigated by Aon’s CIS team, the legal client dropped plans to hire the recommended candidate as Partner. Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

16. 6. What does it cost? • Quick investigations and simple red flag reports can cost approx. EU 6,000 per subject, excluding expenses and VAT (where applicable) • It is usual to conduct intelligence on whole management teams (core functions) • Thorough investigative intelligence goes beyond screening and reporting – involving investigation and analysis by experts who charge their time • Assignments can have capped time costs or employ a stepped approach matching investigatory effort, output and expense with client processes and needs Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

17. 7. Additional information • Additional information can be found at http://www.aonamas.com/products-and-services/corporate-investigative-solutions/ • A White Paper can be downloaded free of charge from the website • Separate Fact Sheets written expressly for corporates undertaking growth plans or M&A activity, private equity investment professionals or lawyers can be downloaded free of charge from the website • Talk to your lawyer and ask them to look at http://www.aonamas.com/products-and-services/corporate-investigative-solutions/lawyers/ White Paper Downloadable Fact Sheet for private equity professionals Downloadable Fact Sheet for corporate M&A executives Downloadable Fact Sheet for legal professionals Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

18. 8. Next steps • Discuss your need(s) with your Aon M&A Solutions representative • Complete a rapid enquiry form http://www.aonamas.com/contact-us/book-a-meeting/ • Request a call back from a member of the Corporate Investigative Intelligence Practice (arranged through your local Aon M&A Solutions representative) Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012

19. 9. Key contacts Other Aon (CIS) contacts you might find useful: David Shapiro (New York) Global head of Aon Corporate Investigative Solutions david.shapiro@aon.com 00 1 212 479 3230 Daniel Sullivan (New York) Aon Corporate Investigative Solutions daniel.r.sullivan@aon.com 00 1 212 441 2147 Patrice Ellen Degnan (Spain, Europe) Managing Director pdegnan@aon.es 00 34 91 340 5543 Jon Higgins (UK, Europe) Managing Director jon.higgins@aon.co.uk 00 44 207 016 9954 Your local Aon M&A Solutions contact(s): Gyorgy Cseresnyes Gyorgy.Cseresnyes@aon.hu +36 1 815 9832 Aon M&A Solutions | David Shapiro Practice Group Leader Proprietary & Confidential | 24 May 2012