Business Capital Risk Control Services, LLC

Description

As seen in the December, 2006 issue of ‘abf journal’, a monthly trade journal for commercial finance professionals. Know Your Funding Prospect: Due Diligence, Background Checks, ‘De-Risk’ Potential Opportunities by Joseph A. Genovese The essence of any business funding transaction is to ensure that all risk factors have been thoroughly assessed, evaluated and mitigated. Capital Preservation for the Lender, Factor, Private Equity Investor, Distressed Equity Investor etc. is paramount. The protocol, process and execution of the Due Diligence (Vetting) process by the Funding Source will dictate how successfully the impending funding transaction has been de-risked. High end Background Profiling (investigation) as a component of the vetting process is rapidly emerging as an underwriting requirement rather than an available option. Investigative research organizations specializing in comprehensive, high end intelligence gathering resources are becoming a solution based facility used by the Funding Sources to effectuate independent, unbiased, investigative background research of the principals and senior level management team of the Funding Prospect. Funding Sources are recognizing the significance of accurately knowing the “background” of the “Key” individual’s that are responsible for the financial health and growth of the Funding Prospect. The goal of the investigative research firm is to accurately “Profile” the target of the search with the objective of creating a character, financial and integrity snapshot of the target. The process of creating the “snapshot” involves the assimilation of information ranging from onsite public record research to high end complex procurement of “hard to find” information. -Legal issues: liens, judgment, suits, bankruptcy, etc. -Character issues: criminal history, sex offender, media attention, etc. -Financial issues: business successes/failures, property, credit performance, etc. -Professional History: employment history, professional designations, education, etc. The aforementioned components are the foundation of a well constructed “Profile”. Findings of significant interest such as past business failures, financial distress, history of prior criminal convictions/arrests , multiple lawsuits, DWI’s, associations with individual(s) of “suspect” reputation along with a myriad of other findings lead to the crafting of the “Profile”. The previously undetected findings can influence and motivate the Funding Source to “rethink” the transaction and, in some cases, reverse the approval. The utility of the “Profile” is measured in terms of how the Funding Source applies the findings in terms of the influence on the funding decision. The Background “Profile” takes on an additional level of importance when viewed in terms of “reputation” risk. The reputation of the Funding Source can be compromised and impaired if funding transactions are arranged then closed with business operations (borrowers) spearheaded by individuals of substandard reputation either by their own actions or through association with others of undesirable character.

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