Due Diligence Investigative Services
What is “due diligence”? There is no legal definition of “due diligence”; however, there are a number of generally accepted practical definitions. The best practical definition to which AIS subscribes is:
A comprehensive investigation to examine and evaluate the soundness, viability and potential risk of entering into a contractual or business relationship, acquisition or other mutual association.
This is often easier said than done. In many respects, what a prospective business associate prefers you know will be plainly represented. The objective is to not only confirm the accuracy of those representations, but to identify derogatory, questionable or otherwise undisclosed historical or contemporary factors relating to the party that might preclude a potential association.
What types of factors? Prohibitive factors - apart from or directly related to a subject’s reputation or industry standing. Some clients that utilize third parties for due diligence purposes may have already conducted some degree of internal due diligence, such as obtaining a business information report from one of hundreds of “business database” companies. Others will rely on this method as their sole due diligence exercise. While this level of internal due diligence may be helpful, it should be readily acknowledged that the information contained in these reports are “self-reported” and do not accurately address a company’s true corporate standing, reputation or current regulatory and litigation history. Nor that of the company’s executive management team. Most users of “business database” reports realize that they have a need to know more information, but don’t really know the extent of their needs or the means to fulfill them.
This is where the skills of an AIS due diligence investigative professional are needed most. It is this professional’s task to identify the particular needs and expectations of the client, and to conduct the appropriate inquiries to afford that client with the comfort level they seek to proceed with or withdraw from a prospective business arrangement.
Our primary focus, of course, is to confirm the veracity of a subject’s claims and representations, but moreover to identify deficiencies in that subject’s background so as to mitigate the risks inherent in a business relationship.
We welcome opportunity to discuss your vendor, acquisition and transactional due diligence screening needs with you and invite you to contact an AIS professional for a full assessment of those needs. The cost of this vital business practice does not have to be exorbitant and may indeed result in significant savings to your overall organization.
Due Diligence Factors
Every client has their own particular list of prohibitive factors, much like an employer would. Some examples of factors that may affect the decision making process includes:
- Criminal conviction histories relating to principals
- Undisclosed bankruptcy proceedings
- Excessive “course of business” litigation
- Litigation(s) representing fraudulent or unethical business practices
- Federal/State criminal indictments vs. the subject company
- Regulatory actions relating to alleged or demonstrated mismanagement
or fraudulent/unethical business practices - Revocations/suspensions of a professional license(s)
- Published accounts of a derogatory nature
(creating potential embarrassment to the client if an association with subject were established)
There are a variety of components that can be populated in a due diligence background check, depending upon client need. Core points of interest on a subject company generally include:
- Verification of company operation(s)
- Corporate charter status (identification of previously used corporate name styles)
- Regulatory/Professional Licensing
Federal Court records (including bankruptcy, civil and criminal filings) - State Court records (upper court level suits, judgments and liens in the state(s)/county(ies) of operation)
Government Watch List of Prohibited Parties - Media Search - published accounts obtained through databases of newspaper/magazine articles, government records and trade publications
Core points of interest on a subject individual (executive management team) generally include:
- Verification of identity
- Regulatory/Professional Licensing (including licensing status, and administrative/disciplinary actions, sanctions)
- Federal Court records (including bankruptcy, civil and criminal filings)
- State Court records (upper court level suits, judgments and liens)
- Criminal conviction histories
- Government Watch List of Prohibited Parties
- Media Search – published accounts obtained through databases of newspaper/magazine articles, government records and trade publications
Expanded components associated with a subject individual may include:
- Identification of current and historical business and residence addresses
- Identification of spouses and family members
- Real property holdings
- Antecedent searches to identify corporate or business name associations in which the subject may have held title as an Officer, Director or Registered Agent
- Significant capital stock/investment holdings in public companies
- Educational Credentials*
- Employment History*
- Motor vehicle licensing records*
- Motor vehicle registration records*
*May require subject’s signed consent.
Please give us a call to discuss your due diligence screening needs. The proper exercise of business due diligence can provide confidence in your decision of business partners and peace of mind to your overall organization.