Doing Due Diligence: Private Investigation of Your Business Partners and Contracts


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Due diligence is necessary when partners and contracts are involved in a business. This is due to certain paperwork, processes and the initial files needed to ensure the company is setup correctly, with valid processes and is legal in activity.

Due diligence may also ensure that the value of the business is appropriate based on the level of assets versus debts and that perceived value is as high as it should be based on other factors. Without performing due diligence, many companies fail from the onset. It is often important to hire a private investigator to ensure research is completed and if necessary surveillance is performed to guarantee partners are not involved in illegal activity and that contracts may be signed appropriately.

Business partners often bring skills, knowledge, talents, assets and various other elements to a new company. Because of this, certain contracts should be drafted to ensure obligations are proper and valid for the partners. It is best if someone with a greater skill in marketing handles this aspect of the transactions rather than deal with customers directly. Another person may have allocated a certain portion of his or her fortune so that the business may thrive with all necessary processes until revenue may distribute additional wealth to partners. For these individuals, they may not want any part of day to day activity, but they may be useful in documents and recording. This is one reason why contracts are necessary in both due diligence and throughout the life of the company.

Examination of Business Needs

When a company has been merged or acquired through transactions, it is vital that all previous and current activity is examined thoroughly. This may require the use of a PI to research and categorize what is necessary for business partnersí attention and time. Once the initial transactions have been processed to what is important and what should be lumped together, paperwork and documentation may be drafted and filed so that the purchase of the company may be completed as swiftly as possible. The use of a business lawyer and private investigator are both beneficial in ensuring the activity and procedures of the purchase are valid, complete and done within a timely manner so that contracts may be signed and employees may know if they are to be laid off or kept with the acquisition or merger.

When performing due diligence with a new business, it is important to ensure all details and documents have been analyzed thoroughly. Once a deal has been agreed upon due diligence is performed, but this often occurs before the contract is signed making the acquisition, merger or sale binding. The value of the company may be determined through due diligence processes, and risks, weaknesses and strengths may be discovered during these procedures. Confidential information is revealed during this stage that provides important details that must be scanned, examined and understood. Various items may be assessed during this level of business transactions such as financial positions of the management, the company as a whole and similar matters. The potential of what could be attained by the business as well as risks associated with the weaknesses are found through due diligence. This means before the contract has been signed, any questions should be asked and answered. These processes permit the buyer to know what value is attached to the company so that it may be determined if it may provide revenue or only cost the purchaser money without massive changes.

Investigations and Business Lawyers

Many documents and persons may be investigated when performing due diligence. This often is through contracts and any business partners attached to the company. Various other files may be analyzed such as income statements, a variety of records, accounts, financial documents, loans, debt and the minutes to meetings with numerous persons in the company. This also permits the investigation to check over claims, privacy details that directly affect partners and other signed paperwork. Because the investigation is private, the business partners may not be aware that it is occurring. This also protects the individual that is analyzing the contractual agreements and what must be done for or with the partners that are being investigated.
If anything is found amiss or that could negatively affect the company, it may be necessary to contact a business lawyer for assistance. Some contracts may require revision and business partners may have performed invalid actions. It is best to permit a lawyer to check these details.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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