Knowing who you are doing business with has never been more important. Borrowers, investors, vendors, customers and employees all represent a degree of risk to your organization. Financial transactions have built-in inherent risks, such as financial, reputational, compliance and possibly legal risks. The potential risks of doing business with someone you don’t know goes well beyond simple economic loss.
Legal liability; reputational damage; law enforcement and regulatory actions; law suits; loss of shareholder value can all result from doing business with the wrong people or organization.
Fortunately, mitigating these risks can be accomplished through investigative due diligence. For years, legal practitioners, mergers and acquisition advisors and commercial bankers have been utilizing financial and legal due diligence to mitigate risk. These categories of due diligence, while extremely important, seldom provide information about a person’s character, integrity, or historical conduct.
Investigative due diligence is the application of investigative techniques developed by law enforcement agencies to mitigate relationship risk by analyzing publicly available information seeking key indicators of a person or entity’s character, integrity and historical conduct. These investigations are designed to gather and analyze a wide array of domestic and international information, to both identify additional crucial information on which to base a critical business decision and to assist in you with the relative likelihood that a given transaction meets your risk tolerance.
Investigative due diligence assists in mitigating business risks by identifying potential inconsistencies, negative information, misrepresentations, concealing information, hidden liabilities and verifying information asserted by an individual and/or an entity, who you are looking to potentially enter into a financial business transaction deal with. These steps involve looking into the individuals and/or entities reputation, qualifications, credentials, certifications, potential assets and historical record. Investigative due diligence will assist in making an informed decision before you invest money in a business transaction.
There is tendency in our society, in some situations, to be overly trusting of potential business partners, joint ventures, investment opportunities, mergers & acquisitions transactions, strategic alliances, and other financial arrangements. Sometimes deals are made simply by a handshake! Investigative due diligence should be conducted on any potential individual and/or entity prior to executing a business transactional deal with them.
Some of the facts that could be identified are:
Cece Nunn - Jul 6, 2020
Vicky Janowski - Jul 6, 2020
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