Reputation and honesty due diligence: is it really worth it?

For companies, competition is intensifying and risk factors are diversifying. Compliance has therefore become essential to ensure growth, secure businesses and protect reputations. As part of a growth or acquisition strategy, due diligence makes it possible to verify the reputation and reputability of a target or future partner. Let's take a look at this Anglo-Saxon concept that is widely used in the business world.

Let's define the concept of due diligence

Due diligence is a procedure for securing third parties. It refers to a set of verifications carried out by a public or private organization (investor, company, community) in view of a financial operation (acquisition, transaction, partnership, recruitment of a manager, etc.).

This research work makes it possible to examine the situation of a company or an individual and to give an opinion on an acquisition operation or on a new business relationship. This includes the verification of a company's strategy, its tax, accounting, social and environmental situation, its digital security...

Reputation and goodwill due diligence: what is it for?

In the field of economic intelligence and business intelligence, due diligence is used to qualify the reputation and reputability of a target. This research work can concern a natural person or a legal entity. Coming from open sources and from the operation of local human sources, the information collected , considered reliable and relevant, allows us to:

  • Identify a capital structure and the end beneficiaries,  
  • Identify the relational networks of the people involved, 
  • Analyze the financial strength of the target,
  • Highlighting possible disputes and/or hidden liabilities, 
  • Identify potential corruption or reputational risks, 
  • Confirm the company's operational capacity.

A key step in the process, due diligence is ideally performed before entering into a business relationship. It may also be required during negotiations in the course of a deal, or in support of specific audits and studies (anti-corruption compliance process, calls for tender, etc.).

Protecting yourself from reputational risks through due diligence

The reputation of a company is linked to many interior and exterior factors such as:

health crises...

ethics, integrity, fraud or corruption,

  • the quality of the products and services offered,
  • the personal reputation of executives and employees,
  • the reputation of customers and suppliers,
  • attacks from competitors,
  • natural disasters,
  • health and safety risks.

In order to face these risks, it is necessary to have a good understanding of the business sector, its competitors, but also the company's managers and closest collaborators. Conducting due diligence before entering into a relationship is therefore essential to guarantee its reputation and identify the difficulties that the company could face.

Cyber due diligence, cyber and e-reputation risks

Cyber attacks are multiplying. It is no longer possible to consider the concept of reputation without mentioning the risks related to e-reputation. Extending research to the perimeter of cyberspace allows us toevaluate the digital exposure of the target and to identify the new threats to which its digital spaces and information systems are exposed. 

Is the company exposed as a result of a breach or loss of critical, sensitive, strategic or personal data? Do these exposures have an impact on the target's reputation? Can they have an impact on the value of the company? Semkel's consultants can answer these questions by carrying out a cyber due diligence or a cyber monitoring.