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Due Diligence is for Everyone, Not Just Investors

     

Due Diligence is a term that most businesses associate with potential investors, buyers, or other outside entities. It can be a tedious and sometimes stressful process that requires businesses to reveal every last bit of information associated with the company; good, bad or otherwise. But what some businesses might not realize is that as crucial as the process is during fundraising, M&A, and other external reviews to an outside partner; continuously undergoing the process of maintaining internal due diligence can be even more valuable to the business itself. And, with a little forward thinking, some minimal amount of effort upfront, it can be done easily and with very little financial investment. 

Here are Three FAQs on Establishing, Implementing, and Executing a Successful Internal Due Diligence Process For Your Business.

How Can Businesses Easily Maintain Due Diligence Records?

Answer: Establish a corporate repository. No matter your company size or industry, from the inception of your business you will amass critical information that will need to be kept organized and secure. Developing an online corporate repository will allow you to keep all of your most critical business documentation organized and in one place. Keeping them secure and accessible from anywhere and at anytime.  

 

A few documents that should be kept in a corporate repository are:


  • Financial reports

  • Customer, employee, and partner information

  • Business commitments

  • Contingent liabilities

  • IP restrictions & information

These documents hold the value of your business. They contain vital information that should be protected in a secure and controlled environment. It’s important that these documents are regularly monitored and updated as well. This can be done by implementing a solution with a simple user interface, audit logs, and activity alerts insures that you know what is happening with your information at all times.

Why Should All Businesses Continuously Undergo Internal Due Diligence?

Answer: To remain ready for opportunity. Getting organized by using a corporate repository as soon as possible means that your business is due diligence ready at a moment's notice, ensuring that you are ready for opportunity whenever it may arise. This will eliminate stress, free up time, and instill confidence when an external review becomes necessary.

 

When you regularly review your own company processes and information you know that everything is as it should be, helping you to:


  • Improve overall function of your business

  • Improve investor relations

  • Accelerate funding rounds

  • Expedite the M&A process

This allows you to feel confident through any transaction while remaining in control of your critical business documents.

What are Ongoing Best Practices for Remaining Diligence Ready?

Answer: You never know when opportunity or catastrophe will knock. It’s best practice for all companies to continuously review its internal documents in a secure place. This will help to ensure that your company is functioning at its highest potential, and if it is not, then you will know exactly where the problem is, and can take the correct steps to remedy the situation. Four simple tips for ongoing internal due diligence are:


  • Define your business goals

  • Track achievement of goals

  • Measure KPIs

  • Benchmark against industry standards

The bottom line is that the due diligence process can be time consuming, stressful, and if unprepared incredibly costly. Getting organized with a corporate repository takes the guess work out of the process-keeping all documents in one centralized, controlled, and secure location, giving access only when required.


Click here to read more about how a corporate repository can benefit your business.

 
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