What is Due Diligence? – A Detroit Breakdown
Due diligence, background investigations, vetting or dirt-digging seem to be all be synonymous with a need for information, whether for a personal matter or for use in day-to-day business. Whether you are a business owner, an investor looking to get behind a new start-up or an attorney working on behalf of your clients there will always a need to have more information, from credible, verifiable sources, so that you can make an informed decision.
The auto industry is huge in Metro Detroit and almost everyone in the state of Michigan isn’t more than one person removed from someone working for the Big Three or one of their thousands of suppliers. People working in the plants in Dearborn, Hamtramck, Flint or Downriver we all could make one phone call and speak with someone in the auto industry. With the recent resurgence of this sector of the market, the auto industry is still being reserved in their investment into the start-up or new business space due to the large downturn from just a few years ago. With their lackluster involvement in this new market, these businesses must turn to an alternate source to get the working capital needed to reach their goals. This is where many of our clients are getting involved but before making any decisions, they have our staff research their prospective partners prior to signing a deal.
If we think of our businesses as a car, my clients the drivers, then due diligence (or any of the names used to describe it) would be the sensors and monitors built into the car. Think about the hundreds, maybe thousands, of pieces of information your vehicle uses just in the moment that you turn the key. Do we have fuel?, Is there enough fuel pressure?, Is the car in park?, and the list goes on. All of that is simply to get the engine to start running and verify that starting the engine will not cause a breakdown. Unfortunately for business owners, and not our vehicles, the “sensors” are not pre-built into our businesses. In the same way that a driver does not need to check the oil temperature, battery voltage, or understand how the blind-spot monitoring works, business owners don’t need to know how to conduct due diligence research. As in the auto industry, there are people like Advanced Surveillance Group whose job it is to get this work done. You would hate to make a decision on a business deal, a private venture or a new partnership that ultimately causes your business to breakdown. And we would hate to see that as well.
You can draw similarities between due diligence and sensors on your vehicle. Blind-spot warning sensors could be seen as an individual (or business) looking to enter into a venture with a relatively unknown individual. It would behoove that individual to conduct due diligence on this possible business partner before moving ahead to avoid being “blindsided” by something from that individual’s background.