What is Due Diligence Check?

A due diligence check is a thorough investigation to identify, evaluate and verify all available information on an individual or entity. Such checks are especially important when you’re hiring or considering a prospective business partnership or new commercial relationship. By conducting comprehensive risk and compliance checks & due diligence checks through a reliable source, you can be more informed and confident in your business dealings.

With widespread risk of corruption on an international scale, due diligence checks with a global reach are more important than ever. To protect yourself from risk and regulatory non-compliance and to ensure successful, legitimate business transactions, companies must make sure they have timely and accurate business intelligence through due diligence checks.

Ultimately, due diligence checks help you:

  • better understand your customers, employees and vendors
  • protect your business from reputational, financial and regulatory risks
  • boost productivity
  • increase profitability
  • improve decision-making

Types of due diligence checks

There are a number of types of due diligence checks:

  • Financial due diligence

Financial due diligence involves reviewing and assessing an individual’s or entity’s financial information and fiscal performance. This involves looking into factors such as earnings, assets, liabilities, cashflow, debt and management. This type of due diligence not only looks at the organisation’s financial results historically, but also examines its forecast financial results and future prospects based on the existing business plan.

  • Legal due diligence

Legal due diligence entails examining, understanding and assessing the legalities and potential legal risks of a business transaction. For legal due diligence, this means reviewing legal documents such as any contracts, loans, securities, intellectual property and pending litigation. Legal due diligence can also encompass integrity due diligence, which further analyses and assesses an organisation’s exposure to legal, corruption and regulatory risk.

  • Operational due diligence

Operational due diligence looks at an organisation’s operations and assesses both the risks and the potential for the organisation’s value to appreciate. This type of due diligence aims to confirm whether the organisation’s business plan is feasible given the operations that are in place as well as planned capital expenditure. Operational due diligence also analyses prospects for gleaning more value from the organisation by improving operations and looks at operational risks as well.

  • Commercial due diligence

Commercial due diligence software investigates the market position of an organisation’s products and services to determine its commercial appeal.

  • Market due diligence

Market due diligence entails gathering data from industry experts, competitors, customers, suppliers and other third parties to look at the current and future market situation of an organisation.

  • IT due diligence

IT due diligence investigates a company’s IT environment to determine whether it’s efficient, cost-effective and secure and whether it can support the organisation’s growth.

  • Intellectual capital due diligence

Intellectual capital due diligence software examines and assesses an organisation’s intellectual capital – that is, its intangible assets. These assets include human capital, the value it derives from certain relationships, intellectual property and other structural capital. Basically, it’s looking at those attributes that differentiate one organisation from similar competitors.

  • Human capital due diligence

Human capital due diligence software analyses and assesses an organisation’s human capital – that is, the economic value of its employees’ skills, education, knowledge, creativity, habits, personalities and other social attributes. The notion of human capital acknowledges that from employee to employee, labour is not equal and that organisations can invest in employees to improve their quality.

LexisNexis products

LexisNexis offers powerful third-party compliance risk management due diligence software, risk and compliance check tools and a world leading collection of aggregated information on people, companies and countries. These solutions let you conduct enhanced global due diligence checks, take advantage of compliance monitoring services and screen individuals and companies around the world from one convenient source.

Nexis Diligence+™

Nexis Diligence+™ enables you to perform enhanced due diligence checks and comprehensive research to investigate and monitor third parties, customers and other entities with whom you do business. This simple and intuitive due diligence software/third party risk and compliance tool also helps you gather all the regulatory data you need to ensure your ongoing compliance.

With Nexis Diligence+™, you have access to an unparalleled collection of global news and information all in one place, including:

  • more than 150 premium business information databases
  • millions of public and private company profiles covering both developed and emerging markets
  • politically exposed person (PEP) lists, international sanctions lists and watchlists
  • more than 26,000 current news sources from newspapers, blogs, and newswires, as well as an archive going back 40 years
  • the LexisNexis® database of international court cases and decisions
  • risk-analysis reports
  • more than 500 biographical sources and executive profiles

What’s more, with the Diligence® built-in report builder, you can produce tailored time- and date-stamped reports to demonstrate your ongoing compliance efforts if you undergo a regulatory audit.

Ultimately, with comprehensive information on the people and companies you’re dealing with, you can:

  • minimise risk and safeguard your business
  • remain compliant
  • improve your decision-making power for critical business decisions
  • grow your business with confidence

Nexis® Entity Insight

In today’s international marketplace, global supply chains, partners, vendors and other business relationships increase your company’s exposure to risk. If you don’t have the proper information and insights into who you’re dealing with across this complex network of third parties, your company is vulnerable to reputational, regulatory, financial and strategic threats.

Nexis® Entity Insight is a risk monitoring solution that lets you conduct ongoing risk media monitoring using a PESTLE (political, economic, socio-cultural, technological, legal and environmental) framework. This framework helps you identify supply-chain and third-party compliance risk sooner. Entity Insight is a cost-effective, off-the-shelf tool that gives you access to premium content and enables customised risk scoring to empower your business.

The tool’s easy-to-use risk management due diligence software dashboard lets you quickly:

  • manage active and pending entities, as well as related RSS feeds
  • visualise news volume for all active entity mentions, colour-coded by PESTLE category
  • identify the top 10 news volume trends among active entities and risk topics
  • explore the context of adverse media mentions and mitigate emerging risks

Essentially, Entity Insight provides more visibility into your business risk and equips you with all the data you need to proactively make informed decisions before problems arise.

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