Nobody wants to know the ending of a book before they finish reading it or learn the end to a movie while they’re waiting in line to see it. This is why you will see “Spoiler Alert” when a blogger posts a movie review or a friend posts something on Facebook.com about a show on Netflix. These two words, “Spoiler Alert” are commonplace in any forum that discusses media or entertainment, but what about in business?
Wouldn’t it be great if you could receive a Spoiler Alert about a customer you just gave a $50K line of credit to? Wouldn’t you like to know up front if they will become a long term customer who keeps current on their monthly payments or maybe the ending would be that they pay late for a few months and then default? If that kind of Spoiler Alert was available we would all want to know right?
Those definitive endings can’t be written before hand in business like the fact that Darth Vader is actually Luke’s father. Sorry if we spoiled that for you, but we can make a predictive ending that is pretty close to an actual ending. For instance; we look at Company A and find they have been in business for 15 years. We look at their litigation record and find they have never been named a defendant in any type of collection lawsuit and no state or federal tax liens have been filed against them. The ending to this story would be that they pay their bills on-time or at least don’t let their bills go past 90 days. On the other hand I look at Company B. They have also been in business for fifteen years. During that time they were defendants in a couple of federal lawsuits, they also have a couple of local judgments filed against them and maybe an unpaid tax lien or two. We think we can both agree that the ending to this story will be quite different. The ending here may be they are a constant collection problem or worse, a legal problem.
We are able to come to these conclusions through experience and analysis. We look at a company’s history to predict their future. We verify assets, research legal filings and dig through a subject’s internet presence to verify their history and predict their future so our customers receive a clear picture of what the future holds. The definition of Due Diligence is the process of evaluating any type of business transaction from all sides before initiating a transaction. We are often asked to prepare a report when a client is buying a business, extending a line of credit, checking up on an existing customer or vetting a new customer. We also often include specific elements based on the situation.
Many of our clients also use them as a baseline to determine if their subject is telling the real story or making up fiction as they go along. It would be great if we could trust everyone, but our clients would agree that would take the Spoiler Alert of knowing the subject just had a $25K IRS tax lien filed against them instead of the subject stating “Everything is fine here, nothing to worry about.”
In conclusion, there is no way to completely determine the financial future of a company. Anything can happen, but with our help we can guide you to a predictive outcome. We will provide you with a picture of a company’s past and current overall financial health which will act as a model for their future. Oh yeah, Spoiler Alert, Old Yeller dies at the end.