We see it every day, and it seems like it’s everywhere. Eye-catching headlines tell us how investors are defrauded out of large sums of money after a deal didn’t turn out as promised. Things just aren’t always as they appear. The recent Fyre Festival debacle is a great example of this. Investors lost millions after an entrepreneur painted the image of an extravagant experience, which was endorsed by celebrity promoters, but the experience completely fell through as a result of horrible misuse of funds and complete lack of infrastructure to support the project. Meanwhile another recent headline reported that 8,400 retail investors were unknowingly caught in a $1.2 billion Ponzi scheme.
Investors don’t just lose dollars and time in these schemes. Reputations are at stake, and there can be liability that comes from conducting business with a group found to be practicing fraudulent activities. Now more than ever it has become vital that people understand exactly who they are going into business with, and what they are endorsing. In a world where the internet gives us a sense of transparency and resources at our finger tips, it’s easy to believe we already have all the information we need.
What most of us don’t realize is that it’s the information hidden below the surface that best protects our interests and investments. That’s why investors these days have found procuring background checks as one of the easiest and most critical ways to potentially avoid doing business with the wrong people. Hiring an acclaimed investigation firm to research your potential business partners has become an essential way for investors today to get some extra peace of mind.
Whether checking a person or a company, background screening has proven to be an effective way to identify any major red flags before going through with a business transaction. When background checking a person, you can address some basic concerns (do they have a criminal history, is their education & professional history legit, have tax liens been filed against them, etc). What can be extra helpful is discovering whether the person has a history of civil litigation, such as lawsuits and administrative proceedings, that could influence your decision to do business with them.
Background checks for a company are equally as important. One obvious provision for a company that is easily overlooked is their licensure and registration. Ensuring that a company is legally registered, has the required licensure and has a clear history from disciplinary action seems like a no-brainer but is absolutely vital. You will also want to have a good understanding of the company’s history and again, address the concerns (does the company have a history of filing for bankruptcy, have judgments and lawsuits been filed against them, etc).
With an increasingly complex business landscape, it has become even more necessary that you have the facts before making a deal with anyone or any entity. Today more than ever, it is better to be safe than sorry.