New business opportunities can be exciting and rewarding, but it can also be risky and costly if companies don't do their homework. Polished company reports and presentations may not always reflect the true picture of the business, its performance, its reputation, its legal compliance, or its potential risks. That's why conducting investigative due diligence before the final decision with a potential partner, supplier, customer, investor or even before hiring a decision-making employee is highly suggested.
Investigative due diligence is a type of investigation that involves conducting research on individuals and business entities prior to committing to business transactions, contracts, or agreements with them. This type of investigation is much more thorough and sophisticated than a simple Google search, as it involves trained professionals and analytics programs that can identify exactly what information to look for, parse through large amounts of data, and cut out irrelevant results. Moreover, some of this work may require information not available online that can support your business in making life-saving decisions.
Investigative due diligence can uncover unethical or illegal activities that the subject has managed to suppress. For example, it can reveal hidden liabilities, undisclosed lawsuits, regulatory violations, fraud, corruption, money laundering, tax evasion, sanctions breaches, conflicts of interest, related-party transactions, reputational issues, cyber risks, or intellectual property theft.
In conclusion, due diligence is a crucial process that is used to assess the potential risks and opportunities of a business decision. By carefully reviewing a company's untold details, businesses can make informed decisions and protect themselves from potential risks.