February 16, 2017
The investigative due diligence process is one of the essential steps before making an investment decision - you need absolute confidence and trust that the company or person you are soon to enter into a high-stakes agreement with has disclosed all necessary information. Investigative due diligence is vastly more than a simple background check - it is a rigorous process that searches out potential liabilities and financial red flags, and should be tailored to each individual client’s needs.
Examples abound of companies that could have avoided costly legal troubles because of hiring or engaging with fraudulent individuals, had proper investigative due diligence been performed. To help you avoid becoming the next headline, following are five tips to keep in mind as you prepare for your organization’s next financial venture.
Top Five Investigative Due Diligence Tips:
- Identify the key individuals in the transaction that warrant investigative due diligence – Who will be handling your money? Who could have an impact on your reputation if the deal goes south? Think outside the box as well – you will likely want to vet the Chief Executive Officer of the entity you’re looking to invest in, but what about the newly-hired Chief Financial Officer, who has only been in the post for three months? Or the long-time Chief Compliance Officer?
- Find a trustworthy investigations partner – You should have utmost confidence in the information you are using as part of your due diligence process. Your investigative due diligence partner should be thorough, accurate, and provide solutions tailored to your industry and needs.
- Define the key components that need to be covered – What is most important to you when determining whether you will do business with someone? Do you care how they are perceived in the media? Or whether they have been sued? Those aspects are where an effective investigative partner will focus a significant amount of time, fully fleshing out available information so you have what you need to make a sound decision. A deep-dive investigation will be the most direct route to uncovering potential red flags. If partnering with Bishops Services, this type of scope would uncover property holdings, corporate affiliations, licensure held (both current and prior), verification of where the subject has worked and gone to school, legal proceedings in which they’ve been named, press coverage, and a myriad of other public records that, when viewed in relation to each other, paint the complete picture and allow you to determine whether this person is who he/she portrays him/herself to be.
- Determine your risk threshold – What items might be returned that would be a deal-breaker? Are you ok with questionable social media activity, but not recent legal proceedings? Thinking through potential red flags and the impact they could have on your business can help streamline the process.
- Proceed with peace of mind – Once the due diligence investigations process is complete, you should be armed with all the information you need to determine whether to move forward or walk away.
Bishops Services has successfully partnered with Fortune 100 clients and global corporations to help them protect themselves, their employees, and their financial investments. Contact us today to discuss how we might do the same for you.