GIANT FROM THE HEART OF EUROPE

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WE MOVE BORDERS

in the automotive, maritime, fashion and household appliances industries. Italy is also the largest market of luxury prod ucts in Europe (third worldwide). Italians love luxury, apparently. One should not forget that they like to accumulate it too - the private wealth in the country is one of the largest in the world! Also, the country is considered the most suitable for children, it is beneficial for pension ers, and quite comfortable for workers. In the time of inhumane capitalism, some of these happiness factors are more impor tant than ordinary growth figures. Italy, despite the aging of the population and low birthrate, has a soft approach to im migrants, especially from Eastern Europe and North Africa, and does not have to worry much about the attractiveness of its economy to foreigners.

THE OTHER SIDE OF PROGRESS

Still, Italy needs investments and growing economy. The Italian economy will not return to the level it was before the 2008 financial crisis until the middle of the next decade, the analysis conducted by the International Monetary Fund (IMF) has shown, citing "two lost decades". On the other hand, by 2025, the economies of other eurozone members will have re corded between 20 and 25 percent growth relative to 2008. The IMF is now expecting

THE COUNTRY IS CONSIDERED THE MOST SUITABLE FOR CHILDREN, IT IS BENEFICIAL FOR PENSIONERS, AND QUITE COMFORTABLE FOR WORKERS

that the Italian economy, the third largest in the eurozone area, will grow by less than 1 percent this year, which is very close to zero, which, in turn, burdens investment prospects. But this only means that Italy is hungry for investments, so generating profit in other markets, including Croatian, is an imperative for a new impulse to the Italian economy, which, despite the diffi culties, is seen as very robust and it doesn't take down other economies with it during bad times, like the American.

PETAR PETRIĆ Licentiate in Law

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n 2016. most foreign direct investment came from Italy, almost 1.918,57 EUR milion, followed by the Nether lands and Luxembourg.

How to enter the Croatian market?

There are many ways, including the establishment of a representative office, outsourcing production, founding a new company or setting up a production site. An often overlooked way for small and medium-sized enterprises (SMEs) to es tablish or expand their business in Croatia is through investment in an existing Cro atian company. The term investment is used here in a broad sense, including co operation with a Croatian partner - either in a cooperative joint venture or an equity joint venture - as well as the acquisition of a Croatian company in the form of a merger or acquisition.

It is very important to evaluate risks carefully and prepare every step with the necessary due diligence involved.

Whoever invests into a business re lationship, be it trade, cooperation or working together as one entity like in M&A situations, takes the risk of not getting what he expects or hopes to get out of this relationship.

How to reduce business risks?

To minimise business risks is the goal of due diligence, which is achieved by scrutinising the target company find out whether the other party is suitable HOW TO REDUCE INVESTMENT RISK Do your own due diligence. That means research your investments before you make them. Check out the investment's history, earnings growth, management team and debt load

CORPORATE

for this kind of relationship and whether it is likely to be able keep its part of the deal. After this investigation and the analysis of the results any investor will have sufficient data to determine if the proposed relationship is viable and what it will take to turn it into a sustainable business partnership. In any due dili gence process the investing party will assess the abilities, trust and creditwor thiness of the other party as well as the quality of its products or services. The general process of due diligence and its principles are the same for all business relationships. However, the process varies widely in intensity and content

FDI

FOREIGN DIRECT INVESTMENT IN CROATIA INCREASED BY 548,90 EUR MILLION IN THE FOURTH QUARTER OF 2017

according to the type of business rela tionship or transaction in question.

In general, due diligence should cover all areas that are important for the transaction as well as posttransac tion integration and operation of the target. This is not limited to legal, finan cial and tax issues, but should also take include sound commercial and reputa tional due diligence as well as technical, environmental and risk management questions.

Modern due diligence contains the following elements: verification of the assets and liabilities of the company, determining and quantifying the risk, determination of risk protection, de termining the benefits of acquisition, post-acquisition planning

There are three main areas of due dil igence investigations: 1) Legal Area: verification of contracts, ownership of property, determination of all real and potential legal problems 2) Financial Area: data checking, man agement and system overview 3) Commercial area: determining the market, the position of the compa nies on the market, the commercial future of the company

The due diligence team

The due diligence team should consist of persons responsible for at least three main areas: legal, account ing and business-commercial. More than one of these areas may be com bined in a single person, so long as each person has a clear understanding of his responsibilities.

Therefore, your due diligence efforts need to be handled by a knowledgeable and experienced team.

Modern due diligence is an invest ment in the future.