I’ve been through a few as well and I understand your point. Often the lack of thoroughness is due to impatience on both sides of the deal to “get ‘er done”. I still don’t think Cerberus has much of a chance of prevailing in any court action. Nothing that is going on a Chrysler right now looks like it is the result of deep dark secrets which were hidden from the buyer.

Now Cerberus knows how many Chrysler customers feel: “Wow, this thing isn’t quite the great deal I thought I was getting!” Just wait till they try to trade up in 3 years … yihaha.

I would guess that the odds of winning a lawsuit would be poor as well especially if Daimler was even the least bit careful. Due diligence is not nearly the open book process it sounds. I’ve been through enough of these on both sides to know you carefully select, filter and review everything you provide. Daimler should have stamped “unaudited” or “draft” on every current non-public info they provided.

Spin it how you like, but I would bet a lot of money that Cerberus’ chances of winning any such action are nil.

To win a damage award Cerberus may have to prove it is the head idiot! Its due diligence may have been deficient, and it bought a business it does not clearly understand and is ill-equipped to manage.

Roger that.

@JT

I see your point, but having witnessed due diligence in action during an acquisition of one of my clients in the medical devices field, I got the impression that there were areas that weren’t touched, and instead the transaction specialists hired by the acquiring party reviewed our audit work papers at a fairly high level to get a sense of the completeness of the reviews we conducted of the financial statement assertions. I misspoke when I used the term “knowledgeable” only in the sense that we are not talking about the need for an accredited investor to invoke federal “blue sky” requirements for the sale of securities, and in the United States the sale of securities by any public entity is the immediate purview of the SEC. That is why, with all respect, I still see this as a financial reporting issue.

Don’t forget that they don’t need to prove what anyone knew or when they knew it. For constructive fraudulent conveyance, no showing of intent is necessary.

I had the misfortune to drive a rental 300m and a rental Neon years ago. They were exactly the types of mediocre crapmobiles the Big 3 had been forcing onto US customers for decades. Until those customers just wouldn’t buy them anymore. Believe me, without Mercedes the situation would have been at least as bad.
Laying the blame on Mercedes may be comforting, it’s still delusional.

The day the German man bit the American dog.

I think the basis of any lawsuit would be that a knowledgeable individual could not rely on the public financial reporting provided by Daimler-Chrysler.

I suspect that Cerberus would have a very hard time winning this. They didn’t rely strictly on publicly available information, but had access to much more information during the deal’s due diligence period.

Cerberus is a highly sophisticated investor and they are going to have a hard time convincing a judge or jury that they were unfairly taken advantage of by the big bad Daimler bully. Cerberus are known as a bunch of sharp-elbow guys themselves.

The only thing this kind of lawsuit does is to perhaps put a little window dressing over the fact that the self-anointed Financial Geniuses may well have blown it completely. Hubris. Gets ‘em every time.