Most organizations that will be making strategic and critical business decisions, it is imperative to undertake an extensive due diligence investigation. Due Diligence is defined as, “the care a reasonable person exercises to avoid harm to other persons or their property.” Investigative Due Diligence refers to the research and analysis of an individual or organization done in preparation for a business transaction or product and service that are supporting an organization.
Often these investigations can bring to light – concealed or misrepresented information and facts that can leave companies vulnerable to varied organizational Risks. Investigative Due Diligence Research will support the organization to mitigate risk and deliver peace of mind. These Investigation research initiatives can potentially save clients from substantial financial losses, operational and reputational damage, or lawsuits. Investigative Due Diligence is necessary for determining the feasibility of a merger, acquisition, investment, partnership, major vendor/supplier contract, or other business relationship.
Investigative Due Diligence can be conducted on entities, organizational networks, and individuals. The due diligence research focuses on obtaining information through public records and proprietary global databases, but open-source research of social media and the web using varied investigative technology tools is also a critical to any investigative due diligence project.
Those Due Diligence research projects targeting company principles, leadership, and individuals of background ‘red flags’ for adverse data regarding the subjects including criminal records, sanctions, PEPS, lawsuits, judgments, bankruptcies, professional licensing violations, regulatory fines, and violations, etc. Additionally, the subject’s biographical information verification can confirm employment and education information.
In many cases, Individuals even senior executives may misrepresent their employment and other biographical qualifications. Professional licenses should also be confirmed, making note of potential sanction or disciplinary histories associated with the license. A subject’s business affiliations can indicate ownership interest in a company that has had financial difficulties, an affiliation that may have been involved in fraudulent activity, or potential conflicts of interest.
Criminal record searches will be conducted to identify if there is any mention in a criminal action or a checkered history. These searches should be performed at the federal, state and county levels where the individual has resided and conducted business. Before agreeing upon any potential major business transaction or employment hire, it is important to confirm whether a party has been tried or convicted of a criminal offense. Additionally, Civil litigation research are one of the most important aspects of due diligence investigations. Like criminal investigative research, civil litigation searches should be performed at the federal, state and county levels where the party has resided or conducted business.
Being the subject of a lawsuit may not be adverse by itself, but it is of utmost importance to determine the types of cases in which the subject is involved. Discovery of a litigious history involving matters such as tax evasion, fraud or other financial crimes can potentially save an individual or entity from a failed investment, business contract, potential lawsuit, etc.
It is imperative to develop a clear objective profile of an individual or entity’s financial background before a business relationship has commenced. Also, due diligence research must be performed of bankruptcy records, judgments, tax, and Uniform Commercial Code (“UCC”) liens in which the individual or entity is named as a debtor. A UCC lien results when an entity lends money to a debtor and the debtor pledges collateral to the lender in exchange for the loan. The details found in these searches could indicate that the subject of the investigation is in a poor financial position and is not adept at handling finances. This could have a negative impact on a potential investment or partnership. In addition, regulatory analysis can help determine if an individual or entity has been the subject of an investigation or been sanctioned by an authority such as the SEC or FINRA.
Another critical component in a due diligence investigation is published adverse media. A comprehensive evaluation of full-text publications (including international, national, and local newspapers, magazines, trade and industry journals, websites, broadcast transcripts and wire reports) conducted through subscriptions with multiple database providers should be targeted to identify derogatory or adverse press or news articles. Media research can provide insight on an individual or entity, especially in business dealings, which did not result in civil litigation. Social Media research is becoming another major tool investigators use to identify additional information about the associates, activities, and the history of a subject.
Failure to conduct investigative due diligence can have a lasting impact on any organization. Every decision needs to be carefully examined to wisely mitigate risk. Proper vetting of a potential business partner is an essential step that must be taken to avoid Financial and Operational Risk and damage to a business’s reputation. Investigative due diligence is an invaluable tool to ensure a client makes the correct business decision.
Modevity investigative Due Diligence Research provides the dedicated resources to support companies, law firms, universities, and government agencies in their varied needs for extensive background due diligence vetting of entities and individuals.
Our Investigative Due Diligence research analysis and reporting services utilize extensive global databases of public records and private data sources with cutting-edge AI platform technology and varied open-source tools.
Modevity experienced Investigator analysts can uncover offshore connections, complex corporate networks, discover liabilities, judgements, criminal records, Federal and Global Sanctions, Pep Lists, Liens, Bankruptcies, Social Media, Adverse Media etc.
We offer professional, discreet, and effective, outsourced Investigative Due Diligence reporting services that allow your team to make smart decisions and to alleviate financial, operational, and reputational risk to your organization.
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