The Spy World Meets the Business World: Understanding Due Diligence.

The concept of due diligence is vast, obscure and overwhelming. Most of our clients privately confess to us that they only have a vague idea of what due diligence means and absolutely NO idea how to do it.

Sound familiar?

If so, don’t worry, you’re in good company. Most people throw around the term due diligence and claim they do it, but secretly hope no one ever asks them specifics about it. Most never really understand what it is, when to do it, where to look for information, who to trust to do it, etc. and so on.

BusinessDictionary.com defines due diligence as: “The duty of a firm's directors and officers to act prudently in evaluating associated risks in all transactions.”

What we have discovered is most business owners believe due diligence is limited to the services of a CPA and/or an attorney. Of course, both offer due diligence services. The CPA performs due diligence to ensure the books and numbers are in order. The attorney performs due diligence to make sure all the documents are in order.

So by definition due diligence means “evaluating risk in ALL transactions.” Referring to business documents and financials as the only means of making a decision for your business is an old model. It misses the bigger picture and can place your company at risk. To properly perform due diligence business owners must look beyond the paperwork and search for the root of what causes business dealings to go bad…people.

So ok, you do background checks on people. Unfortunately background checks give a false sense of security and are often times worse than not doing any due diligence at all. The thing is background checks are only good if the person you’re looking into was actually caught doing something illegal in the past.  Often times scam artist and fraudsters continue to get away with people’s money because people realize it’s not necessarily cost effective to go after them to recoup expenses. So nothing ever shows on a background check report.
(Read 3 Reasons Why You Should NEVER do a background check)

So now what?

That’s when the concepts and philosophies of the counterintelligence world come into play. The big fortune companies get it and employ their own teams of counterintelligence agents. However, these concepts seem to have skipped the rest of the business world somehow. Read more...