Scam exposed: Dutch court cancels €62.9 million Rodeo software agreement
On 11th June 2025, the Amsterdam District Court annulled a share purchase agreement involving Rodeo Software, a Dutch tech company. The ruling emphasised the importance of vigilance and thorough scrutiny in investment activities, following the discovery of fraudulent activities by the company's founder.
At the heart of the case was the presentation of a fictitious customer contract with Alphabet (Google) by the founder to enhance the company's perceived value. The financial documents provided, including annual accounts and bank statements, were found to be falsified, with the claimed Annual Recurring Revenue (ARR) in 2024 being €56.9 million, but it was actually only €250,000.
The court found that the buyer's consent to the agreement was obtained through deceptive means, and the founder's actions were deemed fraudulent. As a result, the buyer was entitled to a refund of €62.9 million, including the purchase price and additional costs.
The court's decision underscores the critical importance of conducting thorough due diligence before investing. To prevent similar incidents, investors should verify the authenticity of financial statements and contracts, and assess the credibility of the parties involved.
Best practices for verifying the authenticity of financial documents and contracts during M&A due diligence include a thorough review of historical financial statements, validation of supporting documents, assessment of the quality of earnings and revenue, a contracts and liabilities check, clear and logical documentation, technology and intellectual property validation, the use of specialized due diligence frameworks, cross-verification of information, and continuous monitoring and reassessment.
Maintaining organized, transparent, and comprehensive documentation combined with expert analysis is key to verifying authenticity and ensuring a smooth due diligence process. The case of Rodeo Software serves as a stark reminder of the consequences of neglecting due diligence and the necessity for investors to prioritise comprehensive due diligence and be alert to potential red flags.
Moreover, directors must ensure their actions comply with Dutch law, including the duty of care and the principles of reasonableness and fairness. The founder of Rodeo Software was held personally liable for the deception, underscoring the personal responsibilities that come with leadership roles in business.
In conclusion, the annulment of the share purchase agreement involving Rodeo Software highlights the need for vigilance and thoroughness in investment activities. By prioritising comprehensive due diligence and being alert to potential red flags, investors can better safeguard their interests and make more informed decisions.
Investors should ensure they carefully verify the authenticity of financial statements and contracts while conducting due diligence, as demonstrated by the Rodeo Software incident. This includes reviewing historical financial statements, validating supporting documents, and continuously monitoring and reassessing. Directors have a personal responsibility to ensure their actions comply with the law, and neglecting due diligence can lead to severe consequences, as seen in the case of Rodeo Software.
