Privacy and Transparency: A Dual Imperative for Due Diligence

By Melissa Tan

Privacy matters. This is particularly true in the online world, where our digital footprint can easily be traced. It is why privacy regulations like the Data Privacy Ordinances in Hong Kong and the General Data Protection Regulation (GDPR) in Europe exist.

Transparency matters too. This is particularly true for protecting investors and managing business risks. When a business decides to go public, it is required to be completely transparent about its business, finances, and structure.

However, not all businesses are transparent to their investors. Due diligence is a critical practice for a reason.

The investigation and audit processes confirm the facts a pre-IPO business provides and ensure transparency to help investors mitigate their investment risk. Different from pre-IPO due diligence, which reviews disclosed facts of a business, due diligence for private equity (PE) and M&A investors is crucial in uncovering any hidden risk associated with their target investments.

Transparency in investigation

Transparency is the foundation of a sound and well-informed investment. Equally important is embracing transparency in conducting due diligence. Having a documented approach with reliable validated sources directly affects the integrity and value of the intelligence gathered during due diligence.

Most pre-IPO due diligence is conducted using open-source information available to all; nonetheless documenting the process is important to validate the listing company’s corporate disclosure.

For PE and M&A due diligence, investors often have specific facts to validate and investigate. To ensure the uncovered facts are verifiable and trustworthy, transparency of the investigation methodology with authoritative verifiable sources is imperative. ?

The transparency level is most demanding for corporate investigations that support dispute resolutions.? When an investigation is conducted to support a legal proceeding, the intelligence gathered is often used as evidence. Without a transparent and credible intel-gathering process, the information may not be admissible in court. Data gathered unethically may also expose the client to potential litigations.

Traceable records and documentation

At Headland Intelligence, transparency is of the utmost importance to us. We are rigorous about documenting our intelligence-gathering process and, wherever possible, provide the names and contact details of sources. We also endeavour to provide source communication records as an assurance of an ethical investigation. This practice reassures our clients of the methodology’s integrity and enhances the data’s credibility, leaving minimal room for manipulation of facts.

Our investigation team is also trained to apply creative approaches to intelligence gathering. Unlike law enforcement, due diligence investigators are forced to be creative as they do not have the luxury of requesting information from businesses or simply presenting court warrants for investigation.

Led by our Chief Analyst Hanshih Toh , a seasoned business journalist and academic, our team extends investigative journalism skills to corporate investigations. This allows us to obtain information from an extensive network of sources quickly, legally, and ethically. With a strong background in investigative journalism, we also uphold a stringent code of ethics and adhere strictly to privacy laws.?

The foundation of providing accurate, verifiable, and independent information is our DNA. Our due diligence service may not necessarily help investors close the deal faster, but it certainly provides credible and accurate information to help them make well-informed decisions confidently.

Melissa Tan is Managing Director of Headland Intelligence, having founded the company in 2021. She takes pride in being the first port of call for many business owners, not-for-profits and professional parties when problems arise.