January 8th, 2024 | Heather Pelton, Head of Operations, Investigations

How Sterling Due Diligence Can Be Incorporated into Your Business

Due Diligence is an important process that can help protect your business interests, investments, and reputation. These types of investigations should be a piece of all investment deals and should be performed at the onset of the decision-making process in order to identify potential red flags as soon as possible. It is important to know if the subject (which can be an individual or entity) of an investigation has been involved with serious criminal matters, is politically exposed, or has concerns tied to their financials, regulatory licensure, global security or their reputation in the media.

Sterling Diligence is a licensed Private Investigative firm with over 125 years of history and a global network of field experts. Investigators conduct research, make phone calls, retrieve necessary documentation, and analyze each piece of relevant information throughout the investigation. Our investigators have years of experience, and include licensed private investigators, attorneys, and individuals with former government, military and law enforcement experience.

But what exactly is Sterling Diligence and how does it differ from Sterling’s core background check offerings?

Let’s learn more about common questions surrounding Due Diligence and how it can help your business avoid risk.  

What Is Due Diligence?

Due diligence is the process of collecting and analyzing information in order to determine the risks associated with entering into a business partnership, an investment/loan, or any type of business deal.

Why Is Due Diligence Important for Organizations?

Due diligence is an important tool in the business world, used to help mitigate a company’s risk when engaging with a firm or person who may have underlying reputational issues and it can provide additional context about how that person or company may behave or take action in the future. Through due diligence investigations, employers and institutions can take a deeper look into many different aspects of a person or company’s background such as their: 

• Work history
• Business affiliations
• Education
• Licensing credentials
• Legal and regulatory footprint
• Global security
• Media reputation
• Indebtedness 

Who Needs Due Diligence?

Due diligence is typically required by an employer or organization seeking to conduct a risk assessment of the people and/or companies they are considering doing business with, or entrusting with sums of money or assets. Sterling Diligence’s clients are often found in the financial services industry, many of whom are employed as asset managers or asset allocators in private equity firms, acting as venture capitalists, or managing pension funds and endowments. Due diligence should be a must for any individual or firm seeking to close a business deal, whether it’s a merger or acquisition, business loan, or real estate investment.

While the majority of our focus is on the investment and pre-investment world, we also provide investigations prior to a fund launching or private equity deal.

What Is the Difference Between a Background Check and Due Diligence Investigation?

There are many similarities between a due diligence investigation and a background check. However, the obvious difference is the scope and the purpose of the investigation itself.

A standard background check is meant to help employers make an informed selection on job candidates by determining their criminal history and verifying their education and employment history. A standard background check can answer questions for a prospective employer, such as: 

• Did they graduate from the school listed on the resume?
• Is their work experience accurate?
• Have they ever been convicted of a felony? 

Due diligence investigations not only confirm these questions, but they also seek to uncover information not disclosed by a subject or a business entity.  

• What is the subject not telling us or omitting from the resume?
• What information is the subject hoping that we won’t discover? 

Due diligence investigations look to paint a full picture for your organization. The permissible purpose for business due diligence differs from hiring, which allows for more tools in order to provide you with a full story.

Due to the permissible purpose, business due diligence investigations do not always require consent to conduct. However, it should be noted that certain information is not available without a individual’s consent.  

Another difference is the presentation and analysis of the information collected. Sterling Diligence’s team researches and reviews hundreds, sometimes thousands, of documents for every investigation. Investigative analysts review each piece of information collected in order to identify and highlight patterns, as well as point out anomalies in a person or company’s background.

Sterling Diligence’s goal is to ensure accurate information and analysis is provided to you in a thorough report for each individual or entity so you can make an informed decision.

When would someone need to engage with Sterling to undertake an investigation?

A business due diligence investigation should be completed sooner rather than later, before an investment deal is complete. Due to the amount of research, analysis and detail involved in a single investigation, it is best to order an investigation a few weeks prior to the closing of any deal. Additionally, if a subject has ties beyond the US, many remote regions can take extra time to collect information.

Case Study: A multinational corporation learned their existing vetting protocols failed to identify a company that had been hired to transport fuel in the U.S. Subsequently, that particular company later stole $6 million worth of gasoline. Due diligence should not be introduced on a case-by-case basis, but rather heavily integrated into your business decision-making processes.

What other kinds of information are required to begin a background investigation?

An investigation can be initiated with a name and location of an individual or company. However, resumes, company biographies or a LinkedIn page can be very helpful, especially with individuals who have very common names. The Sterling Diligence team actively works to uncover information rather than simply confirming information provided by a client or subject.

What are our capabilities outside of the U.S. when it comes to due diligence investigations?

Sterling Diligence has robust global capabilities and can conduct investigations in nearly every country in the world. Our team maintains long-standing relationships with our investigators around the world. 

Business due diligence is an essential element of the background check process that can help mitigate a company’s risk with engaging with a firm or person who may have underlying reputational issues or an unsavory past. If you’d like to learn more you can contact Sterling Diligence here.  

Sterling is not a law firm. This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.