Every investigation is different, but several categories of information can be particularly valuable.
Corporate and Ownership Changes
Businesses evolve.
A company investigated several years ago may now have different owners, officers, directors, managers, addresses, affiliates, or related entities.
Those changes may materially affect the company's risk profile.
Litigation
Litigation can provide important information about a company's history and business practices.
Depending upon the circumstances, relevant matters may include:
- Contract disputes
- Business litigation
- Fraud allegations
- Employment litigation
- Intellectual property disputes
- Judgments
- Other significant civil proceedings
The existence of litigation does not, by itself, establish wrongdoing. The nature, frequency, disposition, and context of the litigation should be considered when evaluating its significance.
Regulatory History
Publicly available regulatory records may identify:
- Licensing matters
- Administrative proceedings
- Enforcement actions
- Disciplinary history
- Regulatory settlements
- Other government actions
Regulatory information can be especially significant when evaluating companies operating within highly regulated industries.
Adverse Media
Not every relevant concern appears in a courthouse or government database.
Targeted adverse-media research can identify publicly reported allegations, controversies, investigations, business practices, and other information that may warrant further examination.
Importantly, adverse-media findings should be evaluated carefully. An allegation reported in the media is not the same as an established fact, conviction, judgment, or regulatory finding.
Sanctions and Watchlists
Depending upon the scope of the engagement, screening may include relevant government sanctions, exclusions, debarments, restricted-party lists, and other appropriate watchlists.
Initial Due Diligence Is Only the Beginning
One of the most important questions for an organization is not simply:
“Did we investigate this company?”
It is:
“When did we last investigate this company?”
A due diligence investigation represents a picture of a company at a particular point in time.
Five years later, much may have changed.
A company may have:
- Changed ownership
- Appointed new executives
- Established new affiliated companies
- Entered new jurisdictions
- Become involved in litigation
- Experienced regulatory action
- Accumulated judgments or liens
- Developed new business relationships
- Become the subject of significant adverse media
This is why periodic due diligence can be an important component of an organization's broader risk-management and compliance process.
The Value of a Five-Year Due Diligence Update
For organizations using a periodic review cycle, a five-year due diligence update can do more than simply repeat the original investigation.
When the original report and supporting materials are available, the updated investigation can compare the company's current profile against its prior profile.
The investigator can ask:
What changed?
Rather than presenting years of information without context, the update can focus attention on developments that occurred after the previous investigation.
For example:
Previous Investigation: Ownership consisted of Individuals A and B.
Current Investigation: Individual B is no longer associated with the company, Individual C has become an officer, and an affiliated entity has been created.
Or:
Previous Investigation: No material litigation identified.
Current Investigation: Multiple civil matters have been filed since the prior review.
That comparative approach can make a periodic investigation substantially more useful to the client.
When Should Due Diligence Be Updated?
Organizations may establish periodic review schedules based upon their internal compliance procedures and risk profile.
But time alone does not have to be the only trigger.
An updated investigation may also be appropriate following events such as:
- A significant ownership change
- Appointment of new key executives
- A merger or acquisition
- Entry into a new market or jurisdiction
- Significant litigation
- Regulatory action
- Criminal allegations
- Material adverse media
- A significant change in the commercial relationship
- Discovery of information inconsistent with previous disclosures
This type of event-triggered due diligence allows an organization to investigate a material development without necessarily waiting for the next scheduled review.
Building an Ongoing Third-Party Due Diligence Program
Organizations with numerous vendors, distributors, manufacturers, consultants, service providers, and other third parties may benefit from developing a consistent due diligence process.
A program can follow a straightforward lifecycle:
INITIAL DUE DILIGENCE
↓
DOCUMENTED INVESTIGATIVE REPORT
↓
ONGOING BUSINESS RELATIONSHIP
↓
PERIODIC REVIEW
↓
FIVE-YEAR UPDATE
↓
EVENT-TRIGGERED REVIEW WHEN NECESSARY
The appropriate frequency and scope should be determined by the organization based upon its own legal, regulatory, compliance, and risk-management requirements.
The important point is consistency.
A documented process can help an organization understand what was investigated, when the investigation occurred, what was discovered, and what changed during subsequent reviews.
Due Diligence Should Be Investigative—not Just Automated
Technology and databases are valuable investigative tools.
But due diligence should not necessarily begin and end with a database search.
Records can contain similar names.
Companies can operate under multiple names.
Ownership structures can change.
Court records may require additional examination.
A principal's relationship with another entity may not be immediately apparent.
An adverse-media result may lack context.
And a database result may identify a potential issue without explaining what actually happened.
Professional due diligence involves researching, reviewing, comparing, verifying, and placing information into context.
That distinction matters.
How Premier Investigations Can Help
Premier Investigations provides comprehensive business due diligence investigations for the gaming industry.
Our services can assist organizations evaluating:
- Vendors
- Distributors
- Manufacturers
- Consultants
- Service providers
- Agents and representatives
- Prospective customers
- Business partners
- Owners, officers, and key principals
Premier Investigations can provide:
Initial Due Diligence Investigations
Periodic Due Diligence Reviews
Five-Year Due Diligence Updates
Event-Triggered Due Diligence
Customized Third-Party Due Diligence Programs
Each investigation can be tailored to the particular business relationship, subject, jurisdiction, and investigative needs of the client.
Know Before You Engage. Know What Has Changed.
The question is not simply whether a company looked acceptable when the relationship began.
The better question is whether you understand who you are doing business with today.
In an industry where integrity, reputation, regulatory considerations, and business relationships matter, comprehensive due diligence provides organizations with information they can use to make informed decisions.
Before you enter the relationship—or continue it—know who is on the other side of it.
Premier Investigations
Confidential. Strategic. Trusted.
Premier Investigations provides investigative and fact-finding services. Investigative findings are provided to assist clients with their own business, compliance, risk-management, and legal decision-making processes. Premier Investigations does not make regulatory suitability determinations, provide regulatory approval, or guarantee licensing, compliance, or other regulatory outcomes. The appropriate scope and frequency of due diligence should be determined by each organization in consultation with its legal and compliance professionals as appropriate.