Business Due Diligence

business due diligence

Letters from a Private Investigator VII

Technical terms often leave us baffled; business due diligence is one of them.  If you’re purchasing a new business or investing capital in a startup, many experts suggest you conduct a due diligence investigation as a precautionary measure. To put it in simple terms, due diligence simply means investigating the background or status of a business or operation. It includes a range of legal obligations, assignments, investigations and reports.

In Indonesia it can be difficult to navigate the maze of bureaucracy. Also often documents and records that should be accessible can be dificult to obtain. Indonesia Private Investigation Agency (IPIA), and Bali Eye Private Investigation Agency (BEPIA) have over four years of experience running business due diligence checks, and have a proven track record of helping our clients with their risk management.

Below is a brief look at some of the most important factors involved in a business due diligence check.


Like you would investigate the personal history of an individual, it is necessary to probe into the history of a business. This category involves asking questions about the date of establishment, the change in the owners, reasons for changes in ownership if it has been frequent, the trading history in terms of cash flow and sales and the upswings and downswings witnessed by a business.

Employee Information:

Employee information is generally requested as part of the business due diligence practice during an acquisition or merger. Employee information you can ask to be furnished includes the list of employees, their credentials, their job roles, pay, benefits, incentives and bonuses. It also includes agreements and contracts signed between authorities and employees. The employee benefits handbook provides information about sick time, vacation and overtime policy.  You should also request the authorities to brief you on the organization’s retirement policy. A private investigator conducting the due diligence process on your behalf determines the trustworthiness of employees based on their personal history and character.

Legal Issues:

There are certain legal concerns you should be informed about too. Legal issues are inclusive of civil and criminal cases at the personal and company level. At the company level it involves asking questions such as the company’s involvement in legal proceedings in the past, pending legal issues, the company’s stand (convict or victim) and causes and outcome of the legal issue. Also included in this section are listings of employee disputes. At the personal level, it involves investigating accusations against owners or authorities in cases such as drunken driving, use of banned substances or soliciting a prostitute.


Ask the company to provide a list of its current assets. Real estate is the most common asset. Other assets are vehicles, equipment, bonds, shares and foreign currency investments. Assets serve as an indication of wise spending and over spending.

Financial Details:

As an investor or prospective buyer of a business, it is your right to demand financial details of that operation. You should request the company to provide financial statements or credit reports for 3 to 5 years. This includes information on accounting methods, accounts payable, accounts receivable, budgets, analyst reports, liabilities, and inventory and tax documentation.  You can also request reports from company auditors.

As a larger company taking over a smaller company, you can hire one or several private investigators to research the business and personal history of the persons involved in administration and management of the latter. The internet has made collecting information about a business or person much easier. However, due diligence uncovers those secrets that prevent unnecessary trouble in future. Due diligence does not guarantee security against investment failures but allows you to make a wise investment decision.

Indonesia Private Investigation Agency (IPIA) and our sister agency  Bali Eye Private Investigation Agency (BEPIA) are fully registered Private Investigation Agencies offering private detective and private investigator services to the Private and Business sectors throughout Indonesia and South East Asia.


About the Author

IPIA's Director of Investigations is an Indonesian national with a Diploma in PI work (with distinction) from the UK and an Australian Government accredited Certificate in Investigative Services. She has worked on over 400 cases for private and business clients.