Tag Archive for 'Due Diligence'

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Inter-Corporate Ownership Searching II

Published on May 23, 2008 in Canada, Company Research, Competitive Intelligence, Due Diligence and U.S.A.. 0 Comments Tags: , , , , .

Corporate Affiliations

The Corporate Affiliations database appears on LexisNexis and Dialog. It can also be purchased as directories and on CD. According to the Dialog Bluesheet, it covers about 184,000 U.S. and non-U.S. companies. This includes private and public companies, both parents and their subsidiaries and major divisions. All major U.S. domestic and international stock exchange listed companies are included. U.S. privately held companies must have reported annual sales in excess of $10 million and foreign privately held companies must have reported annual sales in excess of $50 million to be included in the database. Each record includes the executive names, director names, corporate family hierarchy. Net worth, total assets, and total liabilities sometimes appear in the record.

I have never found this resource particularly useful because it has a high threshold for inclusion of companies. It is also US-centric. It shines for researching large enterprises with a large component in the U.S.A..

Inter-Corporate Ownership Searching I

Published on May 20, 2008 in Canada, Company Research, Competitive Intelligence and Due Diligence. 0 Comments Tags: , , , .

Finding how your subject company fits into a large enterprise structure may turn into an avocation with some companies, but I’ll tell you how to get started.

Begin by understanding the terminology, then in the case of Canada, realize that you will have difficulty recognising interlocking boards as you may not search corporate filings by director name. This leaves you with the immediate subject company as your starting point.

Typically, I start with Dun & Bradstreet Canadian Market Identifiers (DMI). The advantages of the DMI databases (there are several DMI databases) are the number of companies in the database (over 1.2 million), and no sales or asset threshold for inclusion in the database.

The most useful fields in this database are the Dun’s Numbers for the company and its Parent and Ultimate Domestic Parent. This identifies three levels of the overall enterprise to explore in one record. You will have the information on the subject company, and further searches will identify its immediate parent and the ultimate domestic parent.

I then search the D&B Who Owns Whom database for the Ultimate Domestic Parent to identify the foreign parent if one exists. If I find an Ultimate Global Parent, then I determine what my record cost will be by listing the companies in the family tree. Usually, I end up paying the lowest amount as there will be 25 or fewer companies in the family tree. I have never had to pay the full record cost because I have never come across an enterprise family with over 200 member companies.

Stupid Private Investigator Stereotype

Published on May 16, 2008 in Due Diligence, News Media and Private Investigator. 0 Comments Tags: , , .

Over at the Daily Caveat, Michael Thomas criticizes the use of worn-out stereotypes of Private Investigators in a Wall Street Journal article that focuses on the use of Private Investigators by Venture Capitalists to conduct due diligence research.

Virtual Office Scams

Published on May 14, 2008 in Company Research, Due Diligence and Private Investigator. 3 Comments Tags: , , .

Regulators: ‘Fund Manager’ Was a Fraud
By Matthew Goldstein, Thursday May 1, 01:28 PM

[Robert J. ] Sucarato and other potential scam artists are using so-called virtual offices [BusinessWeek, 3/27/08] to make their operations appear larger and more established than they really are. A virtual office is a more elaborate version of an old-fashioned post office box, in which tenants — for as little as $100 a month — get access to a telephone answering service, a reception area, and conference rooms for meetings, along with a mailing address. Sucarato used a virtual office on Wall Street in New York and in Chicago to allegedly induce investors into giving him money.

This is a classic example of poor due diligence by investors. We specifically search addresses, telephone numbers, and fax numbers to help identify this type of problem. If what I find is the least bit suspicious, then I call the neighbouring businesses and the building management to get more details about the type of office the subject company maintains.

I once found a fax number used by 47 different businesses and 18 businesses using the same suite number. You have to ask if such a situation is appropriate for the type of business you think you are dealing with.

Norwich Order as a Pre-Trial Remedy in Fraud Cases

Published on February 7, 2008 in Canada, Courts, Fraud and Private Investigator. 0 Comments Tags: , , , , , , .

An article by John Polyzogopoulos, a partner of Blaney McMurty LLP, in the January 2008 edition of the Commercial Litigation Update explains a Norwich order can help victims of fraud determine what happened to the money.

The recent decision of Justice James Spence in Isofoton S.A. v. The Toronto-Dominion Bank should be of interest to anyone who suspects they may have been the victim of fraud. In that case, Justice Spence granted a Norwich order to obtain the banking records of a party suspected of defrauding the applicant of over $3 million. The unique nature of the disclosure order was that it was directed not to the alleged fraudster, but to the fraudster’s bank. The disclosure order was made to assist the applicant in investigating the fraud and determining what happened to its funds.

The article also illustrates the need for due diligence research prior to entering into an agreement with a previously unknown supplier. Once the victim realised that the supplier was not acting in good faith, they hired a PI who determined that the the supplier was a company without the assets necessary to deliver the contracted goods.