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A Personal Approach to Third Party Due Diligence
Monday, April 6, 2015

Written by Dylan Owens

When it comes to doing business, one thing is certain; no two deals are the same. Whether expanding operations, targeting new markets with products and services, or being in acquisition mode, many companies find themselves handling a wide variety of transactions. One paramount issue to be mindful of is that it is absolutely critical to know with whom you are conducting business.

Conducting third-party due diligence on global transactions is essential. Using an expansive network of on-the-ground agents in over 200 jurisdictions, business analysts, and licensed investigators, Kreller is able to access sophisticated and accurate information on third-parties.

Agents take a “deep dive” approach and have a thorough understanding of each country’s language, laws, and economic climates. That combination of factors allows an investigator to more easily identify a red flag or unethical business practice that would be unattainable using a database.
An in-depth international due diligence investigation provides a company with all of the necessary information needed to either move forward with a transaction or decline a potentially harmful engagement. By doing their due diligence, a company can ensure that whatever engagement they are working on will be a sound one. Reckoning back to the 1830’s idiom: “being careful is probably more desirable than risking a bad result.”

The following case study illustrates how a boots-on-the-ground approach can uncover red flags:
  • A client in the technology sector engaged Kreller to conduct an investigation on a potential supplier in China. The client’s initial database screening presented no adverse findings; however, the client had heard a rumor that the company had significant government affiliations. Therefore, the client asked Kreller to conduct an in-country investigation on the company.
  • A local registration check revealed that the potential supplier presented inaccurate shareholding information in their questionnaire. Subsequent research of the true shareholders not only revealed significant political affiliations, it also uncovered court records which indicated that the principal had been recently convicted of tax evasion and falsification of official records. The client disengaged from further discussions with this potential supplier.
There is no “one-size fits all” approach to due diligence. Each set of circumstances makes every situation unique. This means having the resources necessary to adapt to different situations. Nothing puts a company in a better position to do so than having on-the-ground presence that is not constricted in the same ways database driven intelligence can be. The human element ensures that, when circumstances change, precise information can still be uncovered and potentially save a company from a decline in its stock value or reputational harm.


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