Unlike personal assets, business assets offer so many opportunities for locating property, accounts, sub-contracts, and maybe even off-shore dollars. Few companies are too small or unsophisticated to figure out how to move money outside the U.S. or how to hide money in unspecified columns in their own accounting paperwork. Keeping money in-country but hidden isn’t that complicated either.

In this 7-part series, we get into the nitty gritty of how Hg conducts business asset investigations for our clients. Last week, we looked at asset investigations for employment purposes. In this final post, we dive into investment opportunities and new business ventures.

When an entity is considering a business relationship with another entity, it is prudent to establish the strengths of that particular company or individual. Researching and assessing a corporation’s financial strength is not much different from an individual’s financial check. Corporate financial reports are published by D&B and Experian. They offer their own indicators as to a corporation’s financial strength, based on the payment history submitted by vendors, annual sales and revenue reported, and risk indicators determined by industry.

Investigating the financial strength of a company can be quantified by SWOT Analysis: Strength, Weakness, Opportunity, and Threat are the indicators devised by observing and analyzing how a company fairs by itself, in its markets, and in comparison to similar companies.

For example, a shoe manufacturer may demonstrate strength (particularly in cash flow), because of paying vendor invoices within 30 days, opposed to 120 days. A weakness can be noted, if a company reports only $1.2 million in sales, when other shoe manufacturers of similar size are reporting $4 million and more. But if the end product is good, there is opportunity of acquisition. In other words, the company has the talent in place but is not reaching the channels and market to the fullest extent. Finally, a threat can be seen if the shoe manufacturer has filed for bankruptcy, has been delisted, or has demonstrated poor financial health, such as extended credit problems.

From the Archives: An Hg Case Study

A new client asked that I vet out a potential investor. During the course of my interview with the client, I learned his firm was contacted via email from an overseas investor and offered a few million dollars to buy into a partnership with the client company. My gut reaction was to tell him this was a spam email—a phishing expedition for anyone who would reply. But he was adamant I take the case, so I did.

There was limited information about the other party. The person making the offer was from Pakistan and supposedly was part of a multi-national firm involved in petroleum, automobiles, technology and financial industries. The firm claimed to have almost 17,000 employees and 1.7 billion in revenues.

First, I attempted to locate the firm through Bureau of van Dijk, Skyminder, D&B, and other databases. Nothing turned up. This immediately raised a red flag, because any company of that size and profitability would have a credit history and business reports. Further research on the company name in the news did not reveal any matches. Finally, using one of my Internet resources, I found the company name appearing on a listing of known spammers and proved my gut instinct was right, saving my new client the loss of financial security.

That’s not to say that all potential investment opportunities reveal fraudulent activity, however. In that same week, I was hired to research the background of a small company interested in investing in a new venture my client was spinning off. He asked that I check the credentials of the potential investor. I thought, “Here we go again!” But to my surprise, the “little venture company” was a side practice for Berkshire Hathaway Group. My client doubled the amount of money he was going to request from the venture firm after learning the firm was a big player and could afford larger risks.

Sometimes my gut gets it wrong, and good investigative skills are worth their weight in gold.

Cynthia Hetherington, MLS, MSM, CFE, CII is the founder and president of Hetherington Group, a consulting, publishing, and training firm that leads in due diligence, corporate intelligence, and cyber investigations by keeping pace with the latest security threats and assessments. She has authored three books on how to conduct investigations, is the publisher of the newsletter, Data2know: Internet and Online Intelligence, and annually trains thousands of investigators, security professionals, attorneys, accountants, auditors, military intelligence professionals, and federal, state, and local agencies on best practices in the public and private sectors.