Executive Background Checks: Forewarned is Forearmed

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Essentially, executive background checks as done by companies such as Corporate Resolutions give the client the information they need going into any kind of prospective deal, hiring decision or other potential commitment. For example, a corporate background check done for a client considering a private equity investment of founders and executives on the other side of the deal may uncover some type of past criminal behavior, but it is more likely to simply reveal additional information about the landscape of the potential transaction that the client did not know. In short, executive background checks leave those who have them conducted forewarned and forearmed.

Negative information uncovered in an executive background check does not necessarily kill a deal. For instance, Corporate Resolutions was once hired by a private equity firm considering providing assistance to a manufacturing company. In the course of the investigation, Corporate Resolutions determined that the CEO of the manufacturing company had lied about his educational background on his resume and then conducted a follow-up interview with the executive to see what his explanation was. While the CEO did not have a good excuse for misrepresenting his background, the equity firm decided to proceed anyway with their investment but restricted the CEO’s control of his company as a condition.

Sometimes the business intelligence obtained through a background investigation will prevent a deal. For example, the retiring owner of a chain of convenience stores was considering selling his company to an investment group. Because he had built the chain up from the ground himself over the years, he did not want to leave it in the hands of just anyone and so hired Corporate Resolutions to investigate the investment group.

They first discovered that one of the principal investors did not have his name listed anywhere in the transaction paperwork, and they moved to find out why, discovering that the man had a history of money laundering convictions. This intelligence indicated that the man was likely planing to use the chain of stores as fronts to launder money, and the chain’s owner quickly pulled out of the deal.

Intelligence companies like Corporate Resolutions have the tools they need to assist their clients in extremely delicate situations. For example, they provide hotlines where employees can report situations of sexual abuse, fraud, embezzlement, etc. anonymously and quickly. Using a variety of means, including utilizing connections with former agents of the FBI and CIA, intelligence firms are able to figure out what is really going on. Essentially, they help their clients determine whether a report of wrongdoing is truthful or a hoax.

In one situation, Corporate Resolutions received multiple internal reports from within a client company that its CFO was embezzling. From there, they launched an investigation and determined that this was indeed the case. Furthermore, they found that the CFO had also misrepresented his background and credentials in many ways and had even formed his own dummy company with a nearly identical name as the client company. Armed with this information, the client company moved quickly to terminate him.


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