Prior to conducting a legal transaction with a business or an individual, you need to be sure of their credibility. A background check is a thorough analysis of a company’s history, performance, finances, clients, management, and anything that verifies how they function. This proactive due diligence measure helps businesses effectively safeguard against potential fraud, theft or misconduct down the line.

Before any acquisition, purchase, partnership, or merger, background checks are vital to uncover hidden liabilities. Even if you are not apprehensive about the contract you’re about to sign, it never hurts to be as thorough as possible.

Thanks to background checks, you can identify potential pitfalls before entering into a contract. A private investigator can uncover the details surrounding past behavior and dealings of the business or individual in question, giving you a glimpse of what might happen in the future should you move forward with the deal.

As well as saving you from potentially costly damages to your bottom line, corporate background checks also offer the following benefits to business owners:

  • Achieve absolute peace of mind about a contract or deal.
  • Minimize or eliminate any chance of embarrassing situations that may impact your reputation.
  • Leave no space for any unpleasant surprises.
  • Increase the reliability of the deal and your brand overall.

Background Checks as a Proactive Measure Amid the Pandemic

Businesses, big and small, have been forced to change the way they operate due to the COVID-19 outbreak. Given the increased financial vulnerability, leaders have to be prepared for the potential risks imposed by the pandemic.

“In the past year, we have observed that both large organizations and small businesses alike have reported a dramatic spike in fraudulent activities such as theft, employee management issues, scams, and white-collar crime, to name a few. As part of our corporate investigation services, our expert Private Investigators have been hard at work to help vulnerable businesses pinpoint sources of financial misconduct, whether internal or external, as well as safeguard against possible future infractions. We are strongly advising our corporate clients to implement consistent due diligence measures – such as background checks – as part of their standard risk management strategy in 2021, and beyond!”

Adrianne F. | Star Quality Private Investigations® Toronto

What Liabilities are Disclosed through a Background Check?

When you hire a private investigation agency to perform a background check, they probe deeply into the reputation, background, past performance, litigation history, and finances of the business or individual in question, in search of any potential red flags that have been not been disclosed by the party.

If and when improper or illegal activity is revealed, you have the opportunity to cancel the deal or renegotiate the terms before signing anything.

The following are a few examples of liabilities that a corporate background check may reveal:

  • Criminal history of an individual
  • Overseas human rights violations
  • Litigation of fraud
  • Foreclosures, bankruptcies, and other financial problems
  • Poor reputation, regulatory issues
  • Undisclosed affiliation with suspicious entities

One dishonest partner or one poor investment choice can critically impact your business, reputation, and livelihood. Before you make any transaction, it’s your right to know all the risks and benefits associated with it.

Understanding the Background Check Process

Depending on the intent of the background check, investigations can take a few different forms. Some of the most common include:

  • Business background investigations: Determine any undisclosed issues with the entity as a whole, including litigation matters, regulatory compliance, taxes, and debt.
  • Commercial real estate investigations: Before making a heavy investment in real estate, due diligence measures including background investigations, would ensure that there are no hazardous substances or environmental concerns in the locality. Investigators also verify code compliance.
  • Employee investigations: Due diligence is imperative in the hiring process, particularly for leadership positions. These in-depth employee background checks help certify that the candidate does not have a history of dubious activities or patterns that may put the organization at risk.
  • Client investigations: For some businesses – such as law firms, recruiters, or accountants – working with a dishonest client or one involved in illicit activities, can result in devastating consequences for your reputation and income. A corporate background check can add a further screen in the process of vetting a prospective client.

Once the goals and objectives of the background check are discussed, your dedicated Corporate Investigators will begin the in- depth research and analysis required to either expose any red flags, or verify that they are a viable candidate. Investigators will start with a deep dive into audit reports and public records. This may include political contribution records, sex offender registries, employment records, compliance audits, information systems, professional licenses, inventory, intellectual properties, debt and equity, sales and acquisitions, media research, and more.

As part of a Background Check, depending on the type of information they’re trying to bring to the surface, Investigators may also interview past and present clients and employees/associates or conduct surveillance.

Hiring a Private Investigator for Your Background Check

Background checks, can in theory, be performed internally by any business. But unfortunately, many businesses lack the internal resources, time, or skills to access the scope of data necessary for a thorough background check. In essence, many businesses are only able to scratch the surface in their due diligence processes, revealing the tip of the iceberg instead of everything hovering beneath the surface.

For a more detailed analysis of potential risks and liabilities, hiring a Private Investigation Agency specializing in Background Checks can help you protect your business, employees, and your reputation from a potentially devastating misstep.