Due diligence is an evaluation process into organizations and individuals – by definition, due diligence means “the care that a reasonable person takes to avoid harm to other persons or their asset and property”, according to Merriam-Webster Dictionary. It is also a “comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential”, according to Oxford Dictionary.
With due diligence possible in many forms, such as financial, legal, and environmental, Dynamic Research focuses on reputation due diligence to support other forms of due diligence by different fields of professionals. The purpose of reputation due diligence, which is aimed to identify risks and ethical issues that may potentially create negative reputable damages, may serve different purpose. Typically, reputation due diligence is required because of: 1) potential business transaction, such as IPO, investment, or M&A; 2) regulatory requirement, such as for anti-money laundering, or preventing FCPA risk; 3) ethical concerns, such as CSR, environmental violation, workers’ rights violation; and 4) risk management, such as pre-employment verification.
Most service providers, including Dynamic Research, offer two levels of reputation due diligence. A full, comprehensive reputation due diligence may cover many aspects with a more adaptable research approach, while a focused due diligence has a relatively defined work scope and process mimicking a client’s internal policies and procedures.
Comprehensive reputation due diligence is suitable for business transactions, such as for the purpose of M&A, IPO, investments, joint ventures, partnerships, and long-term contracts. Verification could be made into the target’s reputation, organization structure, financial status, business operations, and ownership / key stakeholder’s profile and behavior.
Typical objectives of comprehensive due diligence may include:
- Verifying the background of organization(s) as well as the controlling person / top shareholder(s) / key stakeholder
- Identifying corporate structure, subsidiaries, and other entities key to the business
- Identifying any potential events and trends that may cause reputation damage or lingering interruption to normal operations
- Understanding the character and track record of important individuals, which may require ascertaining rumors, hearsays, and chatters
- Collecting off-the-books intelligence about the targets’ financial situation (assets and debts).
Focused Due Diligence is designed to fulfill a set of policy and procedure requirements (such as for compliance and operation), and typically has a defined work scope.
In some instance, it may be required for Risk Management. Departments across an organization may require due diligence to manage risk effectively. Examples include:
- Human Resource: Pre-Employment Verification In-depth checks beyond references to uncover misconduct or red flags—especially for senior hires in Asia.
- Marketing: KOL Verification Evaluates a Key Opinion Leader’s background to protect brand reputation from hidden personal controversies.
- Operations: Business Partner Screening Screens suppliers/distributors in Asia for political ties, legal risks, and regulatory compliance—both before and after onboarding.
It may also be required for Regulatory. Legal team may require support to comply with legal and industry regulations. Examples include:
- KYC Support: Identity verification and PEP/source-of-funds checks for high-risk individuals and entities.
- ESG Due Diligence: Reviews environmental, social, and governance practices, permits, and leadership reputation.
- Jurisdiction-Specific Compliance: Custom due diligence solutions tailored to unique regulatory requirements in different regions.