Due Diligence Investigations
About Due Diligence Investigations
What’s the difference between a “background check” and a “due diligence investigation”?
A due diligence investigation is more than a background check and less than a complete dossier about a person or group of persons. If the person owns a business or is a principal in a business this information may also be included in a due diligence investigation.
Due diligence is about depth and range. When what is at hand carries with it rewards and risks, something of a high level importance, where outcomes become more of a critical nature, due diligence is called for. It’s not complicated. Due, as in owed, and Diligence, as in “an earnest persistent application to an undertaking; attentive care, heedfulness”. Going to hire a key employee? Look carefully. Going into partnership with someone or starting a business with them?
Better know all that you can know.
When Due Diligence Investigations should be performed:
- Hiring a key employee or employees
- Creating a partnership with another, or beginning a business with another
- Loaning substantial money. Banks have special due diligence needs. See below
- Taking on a new client or customer, particularly for professionals (accountant firms, CPAs,) or a customer of size or significance to the future or the operations
- Engaging a new vendor that may be central to operations or obligations
- Prior to a merger or acquisition, or as part of the process
- For investments of some magnitude or where there are unknowns, e.g. IPOs
- Engaging with or purchasing a franchise, or choosing a franchise operation to franchise your business
- When a decision is being made to do business with entities or individuals outside of the country.
Remember, what someone tells you or shows you is solely a representation, not a fact, until it is verified, documented.
The idea behind doing a due diligence investigation is to know as much about a person or persons and their business as you possibly can in order to make good decisions. These decisions may be to start a business with someone or enter into a franchise arrangement. You could also be a bank who is considering giving a loan to someone and do not know a whole lot about them or their company. Banks also have requirements under section 312 and 314 in the USA PATRIOT ACT that make it mandatory to do a due diligence investigation before providing any new accounts or transactions. Accounting firms today also want to know who they are considering to represent or do work for especially the work of external audit and certification of their books. Even smaller firms want to know just who people are before they invest, acquire, or go into a partnership or business arrangement. It just makes good sense to do this; in the long run it could save you money and avoid uncomfortable separations. It may even save you a great deal by avoiding the legal costs of a bad transaction or arrangement
At SearchFirst Information Services we are your source for providing due diligence information reports and investigations, and more. We have been in business since 1987 and have a very prestigious list of clients that includes accounting firms, large and smaller banks, law firms, and businesses of all types. We also provide investigative and consulting services that are far ranging, including premises risk analysis, risk assessments, expert witnesses on security matters, etc. Today we have the ability to provide full services in information and due diligence investigations. We also provide detailed investigative services and assessment services as well as expert investigative work for human resource and legal departments of corporations. We are uniquely positioned to be your first choice for information and for security, and we encourage you to come to and remain with SearchFirst.