Remember the words your mother used to say when you messed up something, even though you had been advised not to? I told you so!  Well, you may think you had enough of I-told-you-so´s during your teenage years, but these words will haunt you forever in life if you do not learn to exercise due diligence.  In today’s economic situation, there are opportunities to be had in foreign markets, including Russia and the Ukraine.  What many investors fail to undertake, however, is proper due diligence, often leading to costly mistakes.  And yes, in some cases, even death (of the business)!

Due diligence is part of any wise transaction and it should not be avoided. It helps protect the parties involved and it prevents unnecessary harm coming from mismanagement of funds, illegal or questionable practices, legal misinterpretations, corruption, bribery, fraud, etc.  Russian detectives routinely verify individuals and companies for their clients who are smart enough to know the risk, and to also know that being informed means money.  Clear evidence means profitable decisions.

So why is it that people and companies need due diligence? The truth is it is tedious and hard work. It takes a long time to review and verify all the documentation pertaining to the deal you´re trying to close. It is especially hard when you do not have the expertise or have other limitations like language barriers. What if the company you want to investigate is in China, Russia, the Ukraine or the Philippines? Will you able to go through all the documentation and review and verify the facts when it is in another language or on the other side of the globe?  Probably not.  Will you be able to verify the company has no history of fraud or litigation, and that the office and factory truly exist?  Probably not!

The guidelines on due diligence change over time and that you will first have to research the latest updates and practices. Definitely, running a due diligence in another country is a lot of work, but it is always worth to have it done.  The results of going it alone can be costly and lead to bankruptcy or at least some very bad publicity.  If you are still not convinced, then think about the challenge it meant to build your business –or your savings-, and the time and effort you have put into it. Are you willing to lose it all? The answer is for sure no.   Don’t do business with criminals and scammers trying to steal your money or steal your company’s data.  Contact a professional for help.

Here are some tips for those engaging in an overseas deal:

1. Due diligence is complicated and it should be done by an experienced person, who has deep knowledge of local and international regulations (labor, health, safety, environmental: anything that may have to do with your business). If you cannot do it yourself, you can always hire an international investigation firm or an international law firm. The money will be well spent.
2. Take as much time as you need to review everything. Yes, you might be close to a deadline or feeling pressured by the other party, but taking the time to verify and check absolutely everything will save you from a lifetime of financial burden and stress.
3. Double check as needed. If there is something that does not seem to be right, if you are still not sure about a procedure or feel like you lack of information, consult a professional. Ask your investigator, ask your lawyer or however may know about the topic. It is much better to request advice ahead of time than to be sorry later. Remember most deals (mergers, acquisitions, sales and even marriage!) will bring a load of legal responsibilities down the road. Make sure you know what you´re getting into, and verifying the deal is legit.

Do your homework! Remember that he who has the right information will always make good decisions.  Making right decisions with due diligence is not always easy, but always worth it.

C. Wright
© 2014 Russia PI™

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