I am often asked, “How can I make sure someone is honest, has good character, or is trustworthy?”
Since Humans are… well, HUMAN, it is very difficult. People lie. People cheat. Sometimes things are out of someone’s control. When I owned a collection agency, we identified 2 types of Debtors; the ones that can’t pay and the ones that won’t pay. When conducting Due Diligence on a potential deal or investment, you want to identify potential risks by evaluating their past and how they respond to questions about their past.
Case Study
A client engaged us to search a publicly held company and 5 members of the management team. Of the 5 Subjects, 3 had past SEC Sanctions. Of the 3 Subjects with Sanctions, only 1 of them had Self Disclosed their Sanction.
After further investigations, tax liens, judgments, a foreclosure, a bankruptcy and other debt issues were found on 3 of the Subjects. Of the 5 individuals, only 1 person was “clean” without any history or any adverse findings.
Our Clients Say It Best
“Even though several of the Adverse Findings were over 10 years old, we had many concerns about the Management Team. Given that they were asked, but did not tell us about any of these past issues, we walked away from the deal. Had the Subjects been honest from the beginning, there would have been a completely different outcome.”