Are you considering forming a new business partnership or taking on a new partner? If so, you owe it to yourself and to your business to perform due diligence by investigating any potential partner. What should be included in this type of investigation? And why? Here are a few key things you need to know.
First and foremost, you want to know what your new partner has done in business before and how it has gone. The most common red flags are prior business failures, legal disputes, or bankruptcies — all of which can usually be easily unearthed in a professional investigation.
These are important to know about before you are linked to the new partner because they can affect your finances. A partner’s personal or business bankruptcy may affect their stake in the current partnership — and yours. If the person has had past businesses fail, your own business could be at risk in the future. And you likely don’t want your partnership embroiled in something that can damage your reputation.
Social media investigations can tell you a lot about the person and their work. Personal social media accounts reveal what type of person he or she is. For instance, is their social media filled with pictures of them partying to excess or taking long vacations? If the partner has presented themselves as someone totally committed to their work, this may give you a more complete — and accurate — picture.
Business social media accounts also present a story about the new person’s professional acumen, vision, and experience. Even defunct business accounts could tell you how they’ve handled prior responsibilities, what they may have contributed to a company’s success, how much experience they have, or how forward-thinking they are.
Why is this potential investor looking to enter into a new business venture? While many people have ordinary and obvious motives, every business owner needs to be sure about the person they are getting into business with. Fraudsters can be very convincing, making themselves appear to be a real asset to a partnership rather than a danger.
Even someone who isn’t trying to defraud could have the wrong reasons for wanting to partner up. If they need a quick financial return, for instance, this may not fit your business plans that focus on reinvestment or business growth instead. To get beyond surface appearances, though, you may need a professional who knows where to look and what to look for.
Legal issues involving any partner can affect every partner and the business as a whole. This includes both personal and business legal matters. If you take on a partner whose prior business was damaged by a gender or racial discrimination case, for instance, they may bring those discriminatory practices to your own company and put you at risk.
Even a personal legal matter, such as divorce, can create an ugly mess that opens up your partnership’s finances to public record. And someone being investigated by the IRS may not be the right person to put in charge of your business accounting.
There is a lot involved in deciding if a new business partner is right for your company. Relying only on what you can easily see or what the person tells you could cause trouble with your reputation, your business, or your finances. This is why every partnership should work with a knowledgeable professional investigator.
J.P. Investigative Group, Inc., can help. Call today to make an appointment and learn how our business partner investigations can protect everyone.
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