There is Due Diligence and there are Double D's. I like both.
I liked the earlier comments on looking at the quality and reputation of a firm's auditors. I actually think this provides a valuable clue into management's integrity because a quality house like Ernst can do incalculable damage to its reputation and brand by aligning itself with a shady player and cooked books.
One of the "clues" I have long looked at is who is handling PR for the firm. There are a gazillion spin doctors out there, most are just ad agencies with a PR wannabe and some media contacts garnered via their media purchasing role on the advertising side. Then, many firms simply go it alone with an in-house contact, usually in the adjacent office to the IR guy/gal. The red flag is when a floundering company or individual seeks out a real MOGUL who gets paid huge bucks to help sway public opinion. When one of these guru's shows up, especially unannounced and as nothing more than a byline to contact for further information, I smell huge TROUBLE brewing.
If ROHI's restructuring was so straightforward, I doubt they would have engaged Mike Sitrick, Sitrick & Company, to take over PR for the deal. This is a very costly firm who normally represents Celebrities like Michael Jackson or Kim Bassinger, or companies with life-threatening nightmares on their hands. I am familiar with many of their BK clients, like Collins and Aikman, a multi-billion automotive parts manufacturer.
This is a great PR house, and I am taking nothing away from their experience, reputation or expertise in such matters. But somebody is paying out the WAZOO to hire such a heavyweight and that tells me there is an unrevealed bombshell in all likelihood. ROHI does not have the cash on hand to justify this very expensive investment unless more "stuff" has yet to hit the fan.
Caveat emptor. That's Latin for "Be afraid, be very afraid."
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