Effective due diligence is a critical process that can help you make good business decisions and helps to reduce risks. Yet it can be a lengthy and complicated process, especially in complex transactions. A bad experience could cause significant financial losses. JPMorgan Chase’s $175m acquisition of the startup student loan company Frank is a good example.
Effective due diligence is necessary when assessing a client or contracting with a third party service provider. This requires a high level of information gathering that goes beyond the usual compliance checks. It starts with an extensive risk assessment that includes factors like geographical location and industry sector. It also includes thorough background checks, investigating ownership structures and legal histories. It also involves evaluating the compliance with the law and anti-money laundering practices.
The more an organization focuses on tasks that require judgment within its due diligence program and the more likely it is to be able to hone that ability. It’s important to automate routine data collection so that a business can focus on these judgement-intensive tasks.
Due diligence tools can speed up the process and help businesses save time and money, while still ensuring all checks are done. The best tools allow for seamless sharing, tracking and collaboration between stakeholders and teams. They also include features such as versions control, security settings and audit trails. They also offer a secure repository to organize and store and access due diligence documents. This allows for a better and more efficient workflow, even across multiple jurisdictions.