Turnaround Management and Corporate Renewal

A fluctuating economic climate, stronger competition, high potential for fraud and thinner profit margins, regulatory scrutiny, and cross border transactions in new and emerging markets – all these factors are driving an increased demand for rigorous investigative due diligence. We spoke to Don Pesquie Jr, Managing Director of Financial Risk Mitigation, to find out more.

From our experience, businesses today expect more than cookie-cutter background checks and cursory public record investigations. With millions (and sometimes hundreds of millions) of dollars on the line, clients are concerned with rigorous investigative due diligence charged at a fair rate and completed on time. Above all, it is results that count.

Collectively, FRM’s Managing Directors represent more than 100 years’ experience in the corporate investigations industry. The company provides services to many of the most recognizable brands in all industry verticals and has the staffing and resources to conducts investigations on multiple continents. FRM’s clients that have implemented strong controls as a part of their investigative due diligence practices mitigate their business losses, reduce litigation that may result from such losses, and limit regulatory actions against them.

As a part of a robust and comprehensive approach, the investigative due diligence services that Financial Risk Mitigation performs for its clients provides the confidence to transact or put into place additional controls to ensure business objectives are achieved. Thorough investigative due diligence, consisting of a background check on a company and its management, reveals the track record for success or the questionable business practices which scream “buyer beware.”

In order to meet the demands of its clients, Financial Risk Mitigation sets itself apart from other investigation and consulting firms by its staff, which includes business and finance backgrounds, in direct contrast to competitors who sometime exclusively focus on hiring former law enforcement officers. Many competitors also rely only on electronic solutions as a part of their investigative process, whereas FRM does not.

FRM does use electronic resources, but augments this process through in-house and field investigators who directly confirm the electronic data and provide access to off-line data in the form of difficultto- mine sources and interviews of parties with first-hand knowledge of management’s business practices. Results are provided in an easy-touse narrative report with an Executive Summary. Materially significant issues include original source documentation provided in the report.

In a recent case before the US Court of Appeals for the Sixth Circuit, the Electronic Privacy Information Center (EPIC) urged the Court to uphold a verdict against a major provider of electronic data which contained false information regarding an employee criminal record background check. The brief submitted by EPIC indicated that errors are rampant in the industry as evidenced by the roughly 1,500 proposed class action suits against such electronic data providers. EPIC urged the 6th Circuit to hold electronic data providers culpable when such providers do not independently verify records when delivering reports.

The proprietary internal mechanisms used by Financial Risk Mitigation, Inc., regardless as to whether it is providing an employment report on a member of senior management or whether for a complex cross-border transaction in a high risk environment, include cross-checks of all data against original sources to ensure data validity.

Adopting a flexible approach to investigative due diligence is important as some investigations may reveal things as simple as an omission of a prior employer or falsification of educational credentials on a resume, whereas other investigation can be more much more complex and alarming. Turnaround management comes in many forms from acquisitions, bankruptcy buy-outs, evaluating the performance of an entity, and devising a game plan to focus on the causes of weak performance, among other areas. However, all of this starts with the evaluation of senior management’s ability to perform successfully and this is where Financial Risk Mitigation’s reports can provide critical insights.

Perhaps the most important differentiator of our firm is that we have spent a long time in this business listening to clients’ needs. Our ability to understand their needs in business terms, and to deliver greater detail in dependable, business-friendly reports is already producing positive results for our clients and continued success for Financial Risk Mitigation as a company.

In terms of our clients, we have been working with many major banks, investment banks, sovereign wealth funds, fund of funds, endowments, commercial real estate groups, as well as various other entities in different industries. We primarily do pre-transactional due diligence for the above clients; however, we also get involved when a deal does not materialize as planned. At this point we conduct research to ascertain the viability of legal recovery after the fact. In terms of our team, FRM’s research staff and investigators include specialists with backgrounds in financial analysis, regulatory work, litigation, database research, and direct courthouse research.

This team generated the majority of background investigative reports for alternative investors and commercial real estate lenders. Alongside our dedicated staff members, sophisticated systems of quality control and internal security ensure the accuracy and privacy of FRM’s detailed and customized reports.

Ultimately, we are confident that Financial Risk Mitigation is well equipped to meet the ongoing demands in our industry, and we look forward to continuing to add clients in the future.

Financial Risk Mitigation, Inc.
Name: Keith Kreminski,
Managing Director
Address: Main Office:
2332 N. Arnoult Rd. Metairie,
La 70001
Telephone: 504-840-4229

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