Due Diligence Investigations

Due Diligence Investigations, Business Investigations, Corporate Investigations, Risk Management, Risk Mitigation

Due Diligence is defined as the reasonable steps taken by a person in order to avoid harm to other persons or their property; or the research and analysis of a company or organization done in preparation for a business transaction such as a merger or acquisition.  The due diligence investigation, from a private investigator’s perspective, is the process or steps taken to gather intelligence that is used to assist decision makers in making the most informed decisions that limit their financial exposure to risk.

A due diligence investigation takes a look beneath the façade of a person or organization to ensure that potential liabilities are not concealed, and to verify what has been presented is accurate.  A private investigator conducting a due diligence investigation will not only look at the company itself, but the key people involved within the company to assess the character and reputation of those involved.  This isn’t intended as a witch hunt, but rather an evaluation of factors that increase your risk.  For example, it would be prudent to know if a potential business partner had been accused or even convicted of fraud in another state prior to signing on the dotted line.

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The private investigator would rely on the legal and ethical means of gathering information from various sources in order to conduct the due diligence investigation.  This would include open source information, proprietary databases, and human intelligence to develop a comprehensive background to assess character and integrity.

Open source information would be described as overt, publicly available information.  It may require some digging to uncover, but the types of open sources that a private investigator would access include media publications such as newspapers or magazines, user generated online content to include social media and blogs, public data to include government reports, and deep web searches.

Private investigators also use proprietary databases, which are nothing more than privately owned databases that aggregate information.  Access to these databases has a cost associated to them.  These types of databases provide a more in depth, singular repository of data and are not accessible to the general public.  Access to these databases require proof of license, access control, and applies permissible use restrictions based on regulatory compliance to Gramm-Leach-Bliley and the Driver’s Privacy Protection Act.  Proprietary databases provide private investigators the ability to reference addresses, phone numbers, email addresses, utilities, relatives, neighbors, assets, business licenses, and many other search criteria in one location.

The private investigator will work to develop unidentified references, those people who may know the subject but not necessarily have a vested interest in them.  This type of interpersonal contact, also known as human intelligence, often yields invaluable information.  This information can be used as a starting point to develop a more accurate picture of who the subject is, and more importantly how it can affect your potential transaction.   Is there any behavior, personally or professionally, that could pose a problem to your ability to conduct business with that person?  The information that isn’t volunteered is often the information that is most valuable, and that is exactly what the due diligence investigation seeks to uncover.

There is a popular quote from Benjamin Franklin that reads “An ounce of prevention is worth a pound of cure.”  Information that is uncovered in a due diligence investigation prior to executing any formal business agreement can be used to identify potential risks to that business agreement itself.  Discovering any potentially damaging information prior to executing that agreement can save you literally tens, if not hundreds of thousands of dollars.

Due Diligence Investigations, Business Investigations, Corporate Investigations, Risk Management, Risk Mitigation