Helping clients uncover potential issues at target companies before they escalate.
Sexual harassment. Workplace bullying. Fraudulent sales practices. It seems like hardly a week goes by without another scandalous revelation of executive misconduct or dysfunctional corporate culture making front page news and leaving unknowing shareholders shell-shocked over the reputational and financial damage that follows.
Drawing upon our unparalleled experience in investigative due diligence, our corporate culture checks aim to help investors mitigate such potential risks by identifying toxic internal issues at target companies before they hit the headlines – or the bottom line.
Available on both the front end of the due diligence process and post-transaction, our corporate culture checks begin with targeted research of public records and intensive scrutiny of social media for indications of potentially festering issues otherwise hidden from public view.
We then follow up with confidential interviews with former employees and other human sources with first-hand knowledge of the internal culture at the target company. How does the organization treat its employees? Is the HR department responsive to concerns? Does senior management promote ethical business practices? What is the attitude toward regulatory and other compliance requirements? The answers to these, and similarly pertinent, questions are summarized and combined with the other research in a detailed, written report of our findings, giving investors the chance to evaluate any potential areas of concern before the deal closes – or at least before they become public.
Recent examples of our culture check investigations include the following:
Case Study – A Potential Investment in a Technology Company
Kroll was engaged to conduct a culture check by a client who was considering an investment in a technology company. Public record and social media research identified little negative information. However, interviews with former employees identified several issues of concern. High employee turnover was allegedly due to low pay and one senior executive’s “horrific” management style. Another senior executive was involved in romantic relationships with subordinate female staff. Management seemed to discriminate against women and foster a “boy’s club” environment, with one employee describing how senior male executives would take long breaks during the workday to engage in elaborate drinking games throughout the office, play video games and stream inappropriate movies for the workplace.
Case Study – A Potential Investment in a Consulting Firm
Kroll was engaged by a client who was considering an investment in a technology consulting firm. Database research determined that the founder and CEO had fabricated his education credentials but otherwise turned up no negative information concerning the firm. However, interviews with nine former employees uncovered allegations of billable hour fraud and other unethical business practices, crony hiring by the CEO, deliberate over-staffing by senior management to make the firm seem larger and more attractive to potential acquirers and a corporate culture that some female employees said did not value women as much as their male counterparts.
Case Study – A Potential Acquisition of an Industrial Maintenance Company
A client contemplating the acquisition of an industrial maintenance company wanted to understand both the target company’s approach to complying with environmental regulations and management’s overall reputation for operating with integrity. Public record and social media research identified no significant negative information. However, interviews with a more than a dozen former employees produced several detailed accounts of how managers at one of the company’s facilities regularly violated hazardous waste disposal regulations and falsified records provided to state and local inspectors in order to cover up their illegal activities.