Due diligence on a business partner, investor or deal
Lawyers review the contract. Accountants review the numbers. Somebody has to review the person. That is due diligence, and it is cheaper than the lawsuit.
When to order it
- Taking on a partner, co-founder or key executive.
- Investing in or lending to a private company.
- A joint venture, franchise or distribution deal.
- Acquiring a business or a book of clients.
- Extending significant trade credit to a new customer.
- A deal that feels rushed, or a counterparty whose history is hard to pin down.
What a due-diligence investigation verifies
| Area | What we look at | Red flags |
|---|---|---|
| Identity and history | Names, addresses, education and credential claims | Unverifiable claims; name changes |
| Prior companies | Every entity they have led or owned, and how it ended | Serial dissolutions; abandoned entities; unpaid creditors |
| Litigation | Suits as plaintiff and defendant, judgments, arbitrations | Patterns of disputes with partners or investors |
| Financial | Liens, UCC filings, bankruptcies, tax liens | Undisclosed debt; collateral already pledged |
| Regulatory | Licensing and professional discipline, securities actions | Bars, suspensions, consent orders |
| Criminal | Court records across relevant counties and states | Fraud, theft, violence |
| Reputation | Press, reviews, former associates (interviews where authorized) | Consistent accounts of the same behavior |
| Lifestyle | Public conduct and assets relative to claimed means | Spending that does not match the story |
How it is done
Public records, corporate filings, court dockets, professional databases, press and open sources, assembled into a timeline of the person’s business life. Where authorized, discreet interviews with former partners, employees or counterparties add what records cannot. Field verification confirms offices, operations and assets that exist only on paper. Nobody contacts the subject unless you want them to know. Results typically return within a week or two depending on jurisdictions. See corporate due diligence and business partner vetting.
Legal considerations
Due diligence on a business counterparty is lawful and routine. Where the subject is an individual being considered for employment, the Fair Credit Reporting Act may apply to third-party background reports; see our FCRA guide. Credit reports require consent and a permissible purpose. We stay within those lines and tell you where they are.
Patterns we see
The same stories recur in due-diligence files, which is why the areas above are checked every time:
- The serial founder. Six companies in ten years, each dissolved with creditors unpaid, each pitched as the one that will work.
- The borrowed résumé. A degree that cannot be verified, a title at a firm that never employed them, a license that lapsed under discipline.
- The pledged collateral. Equipment and receivables already financed, discovered in UCC filings after the handshake.
- The quiet litigant. Three partnership disputes in two states, each settled with a confidentiality clause, none mentioned.
- The lifestyle gap. A claimed fortune and a leased everything.
None of these is necessarily disqualifying. Each is something you should know before signing, and each changes terms.
Three tiers of due diligence
| Tier | When | What it includes | Timeline |
|---|---|---|---|
| Basic | Small deals; vendor onboarding | Identity, entity status, litigation and liens in the home state | 2–3 days |
| Standard | Partnerships, key hires, mid-size investments | Basic plus multi-state records, regulatory, prior companies, reputation review | 1–2 weeks |
| Enhanced | Acquisitions, large investments, high-risk counterparties | Standard plus authorized interviews, field verification, deeper asset and entity mapping | 2–4 weeks |
Questions a due-diligence report should answer
- Is this person who they say they are, with the history they describe?
- What happened to every company they have led, and who was left unpaid?
- Who has sued them, and why, and how did it end?
- What do they owe, and what have they already pledged?
- Has any regulator disciplined them?
- Does their lifestyle match their claimed means?
- What do former partners, employees and counterparties say, if interviews are authorized?
- What could not be verified?
When the report says walk away
Sometimes the findings are disqualifying: a pattern of partner disputes, an undisclosed bankruptcy, a regulatory bar, a history of exploiting investors. The report will say so plainly and show the records. More often it says “proceed with these terms,” and the terms are what protect you. We do not editorialize about character; we show the history and let you and your advisers judge.
Quick reference
| Verify | Source |
|---|---|
| Identity and history | Public records; databases |
| Prior companies | Secretary of State filings in every relevant state |
| Litigation | Court dockets, state and federal |
| Debt and collateral | Liens, UCC filings, bankruptcies |
| Regulatory discipline | Licensing boards; securities regulators |
| Reputation | Press; authorized interviews |
| Means | Property records; field observation |
Why the person matters more than the pitch
Deals are presented as opportunities, but they are entered with people, and the person’s history is the best predictor of the deal’s future. A counterparty who has left three partners holding the liabilities will usually leave a fourth. A founder whose prior companies dissolved with creditors unpaid will usually dissolve another. A partner with undisclosed judgments is already managing cash in ways you are not seeing. None of this appears in the pitch deck, and all of it appears in the records.
Due diligence on the person is cheap relative to the deal and decisive relative to the contract. The contract governs what happens when things go wrong; the person decides whether they will.
A deal that changed on the facts
A Nashville investor was asked to fund a hospitality venture led by a founder with an impressive story. The due-diligence report found two prior entities dissolved in Georgia with unpaid vendors, a judgment in Florida from a former partner, and a tax lien filed the previous year. None of it was in the pitch. The investor proceeded, but on different terms: a personal guarantee, staged funding tied to milestones, and signature authority held by an independent controller. The venture is operating. The terms were the difference.
What you get
A report organized by area with the record behind every finding, a timeline, and a plain summary of concerns and unknowns. Your attorney and accountant can act on it: representations and warranties, escrow, personal guarantees, or walking away. In our experience the report pays for itself most often by changing deal terms, not by killing deals.
Questions people ask before they call
Yes. Public records, corporate filings, litigation history and open sources are lawful to review.
Not unless you authorize interviews with people who might tell them.
Yes. Entity research across states is a core part of the work.
Court dockets are public in most jurisdictions; we search them.
Usually one to two weeks depending on jurisdictions and interviews.
Yes. Smaller deals deserve the same questions.
Services and resources
Talk to a Nashville private detective.
Call 615-977-9929 or email contact@delatorgroup.com. Confidential, no obligation, all 95 Tennessee counties.