Everything You Need to Know About Due Diligence

Posted on: 17 June 2019

In the business world today, many joint ventures and partnerships require further investigation to answer and address any questions and concerns that may come up. This is especially true given today’s security environment where risks need to be identified and mitigated accordingly. As such, many individuals and organizations request due diligence reports to help facilitate their decision-making process.

What is a Due Diligence Report?

The due diligence process refers to a full research on the subject in question before action is taken. Due diligence is utilized in a variety of business dealings from acquisitions, immigration services and business valuation to partnerships, investments and expansions. Investors in the Middle East, for example have been keen on asking for a due diligence report before investing in Arab startups.

With that said, due diligence reports are typically conducted to uncover any red flags that could potentially endanger an individual’s or company’s reputation, business process or profitability in any manner. Every deal made entails risk; however not conducting a due diligence report sets a person or company up for exposure to all possible uncalculated risks. The report includes research on the subject matter and the summarized findings. The size and scope of a due diligence report depends on the intent and the subject in question.

For more information on our due diligence reports and other corporate risk mitigation services, click here.

Due Diligence Checklist

There isn’t one right due diligence report format; many reports can be customized to meet a client’s specific and unique needs. With that said, a typical due diligence report includes the following:

PERSONAL INFORMATION

Personal Information Check
Date of Birth
National ID Number
Residence Address
Personal Reputation & Affiliations
Background Checks

OPEN SOURCE INTELLIGENCE (OSINT)

Mass Media Mentions
Companies/ Subsidiaries Mentions
Reputation Assessment
Public Image Assessment
Social Media Assessment
Local Media & Internet Multilingual Sources

FINANCIAL & CORPORATE INFORMATION

Financial Data
Bankruptcy, liens & tax standing
Business Affiliations & Associations
Assets Verification
Credit History

LEGAL RECORDS

Criminal History
Civil Litigation History
Legal Filings Check

Why Due Diligence Is Necessary

Going into a business venture without conducting due diligence is equivalent to going in blindly without fully understanding what you are getting into. Having access to knowledge and information gives you power and leverage to negotiate. If conducted correctly, a due diligence report will provide you with a comprehensive understanding of a deal and the analysis of any risk associated with that deal.

Challenges of Conducting Due Diligence in the Middle East

Conducting due diligence in the Middle East isn’t without its challenges; aside from the unavailability of basic public records and difficulty of conducting licensed due diligence activities, there are also political developments that make conducting due diligence in the Middle East challenging. Elements such as war, immigration and conflict all contribute to the lack of ease in preparing due diligence reports in the region. This leads to a fine line between legal and illegal dealings especially considering the lack of open databases and sources to the general public.

In order to carry out an effective due diligence process in the Middle East, you will need a solid network of governmental and private sector human resources. You also need a legal understanding of the country in which you are operating. A common challenge faced by organizations operating in the Middle East is the difficulty of recouping business losses via commercial litigation proceedings. Company shareholding structure and senior executive ties to sovereigns are just some of the information that is not always readily available for Middle Eastern based businesses.

To Sum It Up

While the Middle East is still on the path of improved security and legal sector modernization, the region will inevitably become an increasingly attractive market for businesses and individuals. Although difficult, you should look into conducting due diligence as an extra safety measure. Keeping that in mind, if you value your reputation and safety you should remain vigilant to mitigate all kinds of risks.

At Crownox, we conduct and customize due diligence reports for a wide range of clients in the Middle East and elsewhere. If you are interested in our due diligence services, contact us today and a representative will be in touch with you.

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risk