Due diligence is the process of looking for hidden liabilities before you enter into a contract with another person or a company. With the help of professional due diligence investigations, you can ensure that you have the information that you need regarding the benefits and risks of transactions before you make an important decision.
When is Due Diligence Needed?
Due diligence is required whenever a company or an individual enters into high-stakes transactions. For instance, a due diligence investigation is needed if your company wants to acquire a piece of real estate, another type of business, or hire a candidate for a job to fill a top position.
With the help of a due diligence investigation, you can uncover information that might not be available. Companies can also benefit from investigating potential clients, intellectual properties, or overseas business partners.
What is Covered by a Due Diligence Investigation?
A due diligence investigation goes deep into the history of a business, individual, or property and other subjects. With the help of such investigations, you can uncover illegal or improper activity that has been hidden. This investigation can also reveal a history of litigation in which the subject was involved in the past.
Due Diligence Investigations can also provide in-depth information about a subject’s finances, client history, reputation, or other things that can be a liability. Some examples of liabilities that an investigation can reveal are as follows:
- History of financial problems like foreclosures or bankruptcies
- History of accusation of fraud or litigations
- The criminal history of an individual
- Undisclosed affiliation with an associate of poor reputation
- History of overseas human rights violations.
What is Involved in the Process of Due Diligence?
The process of a due diligence investigation involves three stages:
- The process starts with the discussion of the investigation goals; it is essential to begin with, a proper understanding of what the client wants to accomplish. The risks and liabilities in the investigation are also understood.
- After the goals are established, the investigator looks to conduct the required research, analysis, and investigation.
- Finally, the investigator will present a report that will detail all the information that was found and highlight if there are any areas of concern.
What Type of Research is Involved?
The method of the due diligence research will depend on the subject and the objective of the investigation. The investigators who are looking for how much a company can be trusted will research the background of the company.
They will look for public records and audit reports, interview employees and clients, perform asset searches, do mystery shopping, and conduct surveillance. If the subject of the investigation is a person, the investigator will research interview associates and public records.
Some of the things that the investigator may look for during the research are as follows:
- Debt/inquiry
- History of sales and acquisitions
- Employee data
- Professional licenses
- Inventory
- Assets, including real and intellectual properties
- Political contribution records
- Litigation history
- Sex offender registries
- Bankruptcy records
Final Words
Many people can perform due diligence investigations, but the process is time-consuming. As a result, you can hire professional investigators who have the expertise and time to do in-depth research legally and properly. You need to hire a professional investigator from a reputed firm that specializes in due diligence investigations.
