I Object
Research Objectives
In our second blog post, we told you that most books on research and investigations do it wrong. That is, they focus almost entirely on the various things you can look at without really telling you why you are looking at them. The endless lists of documents you may come across tell you that there are endless documents you may come across. Why do you care. For instance, why do you care if there is a UCC filing?
When I first started doing research for Big Firm, I was given a list of searches we performed. One was UCC filings. No one quite knew what UCC stood for yet alone what was a UCC filing. Me, having just taken the Bar examine, which is the one time you will know much about secured transactions, did know what a UCC filing was. And I had to figure out why we were searching for them. See, mostly UCC filings are searched to ensure a prefered claim is "good" or can be good. It's about security for loans. What did it matter in a business background investigation, especially one with the point of assessing client acceptance risk. It made little sense to search UCC filings, but in the process I learned the key to research. Know your objectives.
Most research matters have an overarching objective, a greater purpose. Do we do business with this guy, or in the cases where I started, should we take them on as a client. Except what does that mean. Put another way, what do we need to know to know. What are the various pieces to put together, that at the end of the day will allow the big question to be answered. Due diligence means reasonable steps taken. What are the steps taken.
In the case of client acceptance, we wanted to know five things:
- Did we know the legal name of the company and were it's executives and owners consistent with what had been purported.
- Had the company or its management been involved in state or federal securities actions
- Had there been litigation involving the company or its key management
- Had the company or its key management filed for bankruptcy
- Had any adverse or "sensitive" been reported on the company or its key executives in the press
Anything else, tax liens or judgments, DUI actions, additional business affiliations; resume verifications, they could matter, but they did not matter for routine client acceptance research.
Now, here's a question for a future post: did they never matter? Did apply this same set of objectives no matter what, ever potential new client. We did not. You have to know when you need to add objectives; know where else to look. Remember, depending on the case you could subtract objectives as well as add objectives. Let's say you prospective client was IBM. Did you care about every last article published on them. You could limit yourself to a few major publications. On the other hand, a start-up with no track record, you might have to expand greatly to find relevant press. We have listed on our website, the most common areas or objectives that are covered in business background research, what you can add or subtract. Which ones you choose, we'll leave for another post. Just know how to object.