'You talking to me?': The importance of interviewing your management team
February 26, 2020
By Joelle Scott, COO, Corporate Resolutions
A due diligence background investigation relies heavily on public record sources. But when a red flag is uncovered, the answer is not always on the written page.
Using an experienced investigator to conduct an interview helps resolve sensitive issues without compromising the investor's relationship. And a management team is often more candid when talking to an investigator about embarrassing behavior.
Nearly 30 years of due diligence experience has taught us that the interview provides insight into someone's character. Investors not only need to know the history of the management team but also how they will perform after the deal closes. We've seen an indignant doctor callously respond about patient outcomes, a CEO admitting he lied about his MBA to impress his YPO group, and, a CFO adamantly denying multiple criminal charges filed against him. In each situation, the interview impacted the deal: The doctor's situation provided leverage for investors, the CEO changed his corporate bio and, unsurprisingly, the CFO incident killed the deal.
The interview provides an assessment that cannot be achieved through document analysis alone. Investors have access to many resources during due diligence; relying on skilled investigators to broach delicate issues is another one in their arsenal.
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