Preparing for a due diligence background investigation
One of the things I remember most about my late son, known in the restaurant world as Chef Denn, is our conversations about how preparation is the key to success in the kitchen. He suggested that the rest of the world would benefit from the practice of mise en place, or having everything you need where you need it before you start cooking.
It’s a lot like that in due diligence investigations. Taking some time before starting the search helps us become more efficient and effective. We know what’s important to our client, make sure we have everything we need to move forward with the right tools, and we have the right goals in mind. We know our limitations and how to work around them.
Here’s how to prepare for our due diligence investigations and get better results in less time:
Know what our client needs – Getting some context helps us match the the level of due diligence to our client’s level of risk. Is this a first pass to help decide if the deal is worth pursuing, or are they ready to sign the contract? Do they need this now, or do they have time for a deeper dive? Would boots-on-the-ground investigations follow the online research?
Know the warning signs – What should we look for in the data? What warning signs indicate the potential for fraud? Which are more severe, and which need to be taken in context with other warning signs? Most importantly, we try to find out what matters to our clients. Some clients have a higher risk tolerance than others, and some industries consider certain behaviors the norm, while others may not.
Know our sources and how to use them – Invest in learning about the best places for reliable information and what sources to avoid. Save time and money by getting to know the latest advanced features and identify the strengths and weaknesses of each database. Invest in learning before you get started to avoid missing any important details.
Invest in premium sources – We miss a lot when we rely on just free resources. Premium sources offer specialized content, pro search tools, copyright clearance, useful formatting, and much more. By using a combination of free and fee-based sources, we work more quickly and get better results. We also cover the most content, so less chance of any misses.
Pay attention to the laws – Several federal laws that protect your privacy affect due diligence background investigations, including the Fair Credit Reporting Act, Gramm-Leach-Bliley, and the Family Educational Rights and Privacy Act, and many states have their own versions. That means no official degree verifications without consent, knowing the difference between due diligence and compliance, and learning what financial information is legally available and what’s not.
Make sure to prepare for your due diligence investigations so you work more efficiently and effectively and don’t miss what’s important to your clients.
