The people running a business make or break it, and you definitely don’t want to bring someone aboard who is likely to cost you, financially or otherwise. Before you go any further with bringing on a partner, it’s time for vetting. The way you to do that is through “due diligence,” researching your potential partner’s background to make sure they’re a good fit and that you can trust him.
In today’s world, you have a good bit of information you’ll need at your fingertips—literally. Search engines are your friend, and within minutes you could be looking at important information regarding your potential partner, including a criminal background check and credit reports.
You can also find out a lot about a person just by running an Internet search for their name or business along with some key search terms (“lawsuit,” “complaint,” “bankruptcy,” etc.) to uncover any legal, financial or ethical problems or a generally bad reputation, as all of those can affect your business. While searching, you’ll probably come across their social media profiles, which can also tell you more about who you might be bringing onto your team.
Remember that if you do find complaints or other troubling information, you don’t have to simply accept what you’ve learned at face value. You can use what you’ve learned in another important aspect of due diligence: interviews with both your potential business partner and those who have worked with them.
While covering your bases, you don’t want to harass your potential business partner or anyone associated with them, so if you experience some pushback, it’s probably best to back off. At that point, you will have to determine for yourself whether your conduct warranted an adverse reaction and how to proceed—again, remembering that one-on-one interviews can go a long way in helping your decision process.
For even more tips on how to do due diligence on potential business partners, send us a message or call us at (314) 454-9100 today.
Scott’s practice is dedicated to assisting entrepreneurs, investors, emerging and established businesses with the unique and often challenging issues they meet throughout the formation and growth process: from entity formation, to the management of founder relationships and economics, to the protection of intellectual property, to the financing of growth and navigating securities law compliance. He assists clients as they continue to grow and develop, whether this involves merger and acquisition activities, international licensing and distribution arrangements or counseling of directors and officers.