In any industry today more than any other time, due diligence must play a vital roll as part of any company’s housekeeping policy, it should be employed at the initial stages of any joint venture and agent selection.
While the task of carrying out due diligence can involve complex networks of ownership, directors and links to government officials, in some ways common sense is the first indicator.
So what is due diligence? It is best described as: “The process of systematically evaluating information, to identify risks and issues relating to a proposed transaction, i.e. to verify that information is what it is proposed to be”.
Due diligence must in every case be measured, reasonable investigation into a company, group of companies or individuals to obtain intelligence which allows you to make an informed decision based on what you have discovered, without being totally reliant on it.
The definition of due diligence is simple. What is not simple is how to carry it out, when to carry it out or even how much should be built into the budget to pay for carrying it out.
Due diligence can be split down in to sections:
Company information - director's names, formation and ownership details
Financial information - current turnover and past returns
Legal history - judgments past, present or pending
Political risk indication - country and region
While the above can be broken down further into complex discussions and argument, it represents the fundamental basics of what needs to be investigated to help with decision-making. Every company can undertake a level of due diligence at no cost whatsoever just by having a set standard in place and a check list for every supplier, agent or end-user. This information must, of course, be verified, but just asking for it will in itself add
