Business investigations on mergers and acquisitions, competitive intelligence, vendor and supplier evaluations, and data mining research all require analysis. In this four-part blog series, we discuss four methods of analysis—SWOT, CARA, Supply Chain, and Value Chain—and conclude with how an investigator gathers data from these methods in order to produce a comprehensive due diligence report.
A longtime client called after he’d taken a few months’ hiatus from Hg’s services. When I asked him if work had been slow or he’d maybe chosen another investigative firm, he admitted that he’d tried a less expensive firm. I inquired if he’d been satisfied with their services.
He shared with me his disappointment, because the other firm reported to him through a series of haphazard emails and phone calls that related the facts as they occurred. His workload is already demanding, he explained, and receiving dribs and drabs of information made it impossible to track and manage all the details of the case. “I miss Hg’s detailed analyses,” he confessed and asked for a new contract to be drawn up.
A valuable investigation is not a matter of merely collecting information and making claims. Investigators may be good at finding details, but if they lack the critical thinking skills required to synthesize their findings, analyze the interlocking data, and document their results in a logical report, the client can be left with more questions than answers.
The professional method for closing an investigation requires a report with all the findings and an analysis. Often, the true analysis occurs during the report writing procedure. Spelling out the details to the client on a page-by-page basis reflects each day’s events, while focusing on the purpose of the content.
High-level analysis methods assist the investigator in writing the report. The method of analysis depends on the type of case being conducted and a client’s needs. This week, Hg tackles SWOT Analysis.
SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats.
It is a flexible method often used in investigative reports. The analysis can be a stand-alone report or included in a larger investigative report. SWOT is a popular method of analysis for due diligence investigations, because it allows the investigator to evaluate an item, person, or business in comparison to others. As investigators gather details and facts about their target, they decide which part of the acronym the fact may fall under.
SWOT offers more benefits than the analysis itself, because it allows for comparisons, enabling the investigator to analyze details that can lead to other investigative tracks. For example, if a company is showing $750,000 in annual revenue, but similarly sized companies in the same market and type are showing $1.5 to $2.0 million in revenue, that would be an indicator of a Weakness or a Threat. Perhaps the sales force is ineffective, the company is young to the market, or a bad reputation is involved.
Case Study: The Orange Grove
An orange juice producer is considering the acquisition of a Florida orange grove. Using the SWOT method, the investigator researches and compiles all the required data and facts. Based on our research, here’s what we uncovered:
Location, size of grove, present and established workforce
Outdated machinery and equipment in need of replacement, old grove with limited harvest potential
Future ability to purchase adjacent property to expand grove and harvest capacity
FDA tests result in bacteria-related illnesses due to bad well-water
All of these issues are presented to the client, who ultimately makes a financial decision based on our analysis.
Filling in the blanks of a SWOT analysis is an easy way for an investigator to create a report. But often, simply putting the details on paper in a specific formula brings to light the issues that otherwise might not have been noticed.
As in the Orange Grove Case, I was forced to consider possible opportunities—of which I was finding very little. By focusing on that section, I came across the adjacent properties for sale. Had I been writing a standard, detailed report, I wouldn’t have been focusing on opportunities, not known of the properties for sale, and, thus, not mentioned it to the client who would have missed out on this Opportunity to offset the Weakness, i.e., old grove trees.
Using the SWOT method will offer up a final report that reads smoothly, is easy to navigate, and looks attractive. Clients appreciate the ability to glean key information succinctly. If the client wants to read about a competitor, he or she can turn directly to the Weaknesses or Threats sections of the report or turn to the Opportunities section to read about a potential acquisition.
When your investigation requires creative and critical thinking, e.g., fraud or deception cases, SWOT’s check-box style of analysis is not useful. SWOT can negate the creative and critical thinking that some investigations require.
Next week, we’ll look at CARA analysis, a much better analysis method for analyzing individuals, particularly if suspected of fraudulent behavior.
If you’re an investor and would like to talk with us about our Financial Sector Enhanced Services Suite, please contact our office for a free consultation. We offer enhanced due diligence, business intelligence, investment asset investigations, enhanced background checks, and enhanced interviews and profiles by our veteran investigators with over 40 years of combined experience and expertise.
If you’re an investigator and would like more case studies, check out The Guide to Online Due Diligence Investigations: The Professional Approach on How to Use Traditional and Social Media Resources for Investigations, or register for one of our webinars.
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.