Some businesses never think about hiring a private investigator to conduct corporate due diligence before they start a business relationship with a new client. Such businesses may end up losing a lot of money that would have been saved if they had involved a private investigator at the beginning. This article discusses some of the pitfalls that conducting corporate due diligence can save you from falling into regarding that new client or business partner.
Corporate due diligence can save you from doing business with a client with fraudulent documentation. For example, you may unknowingly hire a trucking company that presented to you falsified fleet insurance documents. Such a company can cause you major losses in case your goods are damaged during an accident on the highway. A private investigator would have looked into the papers of that company before allowing you to enter into a business relationship with that trucking firm.
Corporate due diligence can also help you to avoid supplying goods and service to a firm whose finances are not in order. For instance, the due diligence conducted by a private investigator could uncover tax liens that have been filed against the company. Such a discovery can prevent you from extending credit to such a business since it may not be able to pay for what you supplied.
Lack of Integrity in Key Officials
All business is based on a degree of trust between the parties involved. You should never do business with a company whose key decision-makers lack integrity. A private investigator can help you to confirm that the firm you wish to do business with is credible. For instance, he or she may find out whether the managers of that company have multiple arrest records. Such records may alert you that it may be unwise to do business with a firm whose leaders have had several problems with the authorities.
Unusual Address History
Another red flag that a private investigator may unearth about that new client is an unusual address history. It is unusual for an established business to change addresses frequently. Such an occurrence may point to something sinister about their operations. For instance, the firm could be changing addresses very frequently because they get evicted due to their inability to meet their rent obligations. Alternatively, the frequent changes of address may be due to the accumulation of unhappy clients or business partners. The change therefore gives them an opportunity to start afresh and win new clients or partners. It would be too risky for you to engage in business with such an unstable firm because chances are high that you will also fall victim to their habits. Corporate due diligence can save you from falling into that trap.
A private investigator can also be able to establish what kind of media or public attention is given to the company that you intend to do business with. In business, public perception can mean the difference between thriving or shutting down.
Negative publicity, such as ongoing negative media attention about copyright infringement by the company, can make it risky for you to enter a business relationship with that firm. This is because such bad publicity can cause the clients of that company to cancel their contracts. It would then be hard for that company to get money to pay for your goods or services once they lose their major clients.
It is advisable to be cautious when you are doing business with a company against which regulatory complaints exist. This is because such regulatory complaints can quickly escalate into major civil or criminal charges against that company. For instance, would you gladly enter a business relationship with a company that is being investigated for flaunting clinical trial regulations as it develops a drug for a common disease? That complaint can result in the company being shut down by the regulators. Such an eventuality can cause you to lose the money that the company owed you. A private investigator can find out if there are any regulatory complaints against the company. This information can then help you to make an informed decision regarding the precautions that you need to take when dealing with that new client or business partner.
Significant Political Connections
You should be able to enter a business relationship based on the merits of the potential clients or partners only. Companies with significant political connections can be risky to deal with. For example, the company could be getting contracts illegally due to their political connections. Your future with such a company can therefore end badly for you in case that company suddenly collapses after its political godfathers are no longer in office. It is therefore important for you to hire a private investigator so that he or she can establish whether the potential client or business partner has major political connections. You can then use that gathered information to determine the extent to which you should deal with that company in light of its links to the political class.
The lifestyle or standards portrayed by the managers or owners of businesses should usually be commensurate with the financial status of that company. Executives who are lavish in a way that cannot be expected due the limited assets and financial strength of their companies should be scrutinized further in order to avoid getting entangled in issues that may damage your firm’s reputation. For example, the luxury cars driven by the owners of a struggling company may have been bought using money obtained from illegal activities, such as smuggling illicit drugs. A private investigator can unearth such unacceptable sources of the funds that are being splashed by the executives of the company that you intend to do business with.
That information can save you from entering a business relationship with a company with links to the criminal underworld. You will therefore be able to safeguard the blemish-free reputation of your company. As you can see, private investigators can play a vital role in ensuring that businesses protect their interests in every relationship that they enter into. Do not imagine that it is only necessary to hire a private investigator prior to signing a major contract. The contribution of a private investigator is crucial in every business transaction that you enter into. In the end his or her contribution will be far greater than the money that you invest in acquiring the services of that private investigator.