I just wanted to weigh in as a former Big 4 auditor (btw: it is Big 4 not Big 3 - EY, KPMG, PWC, DT) and currently a business management consultant.
I think I have few points to provide:
1) An audit and a due diligence for an acquisition are two entirely different things. Just completed an acquisition that took over 7 months to complete and the acquired company was only 30M in revenue and one loaction. Smaller unknown companies actually represent greater risk and require more DD to be sure that the acquiring company is really getting what they are paying for. I would assume that the multiplier for EESO is 5 or 6 at least.
2) Audits can take only 2-3 weeks after having done them a few times and the company is using sound accounting practices which is often not the case in small companies due to lack of awareness, skills and systems, I would also point out tht auditors need the employees to help them get the data, answer questions, etc. Without the employees, nothing can get done. Based on the number of employees and the different things they are working on, I doubt the auditors have been given a lot of attention.
3) Companies do not sign multi-year, multi-million dollar deals in a few days. There are payment terms, creturn policies, conditions, out-clauses, penalties, that need to be hashed out, which take time. Not to mention that transportation / shipping routes and transfer of ownership need to be defined.
4) As an investor, I look for companies with a growth strategy:
- Let's see: South Korea, South America, and now multi-state locations in USA. That sounds like a growth strategy.
I agree that numbers are necessary and that audited financials, by a competent firm, is even more important so that we have an independent validation, but I would suggest that pushing the panic button or calling this a scam is premature.
JMO
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