The use of artificial intelligence is becoming a norm within the financial services industry. AI-aided automation has penetrated just about every aspect of business, including Due Diligence.
Prior to the advent of AI, manual due diligence checks took up thousands of man-hours. Thanks to the developments in AI and Machine Learning, Due Diligence has become more accurate, quicker and easier than ever before.
What is Corporate Due Diligence (DD)?
Corporate Due Diligence is an investigation performed by a company to identify potential risks associated with acquiring or investing in another company. It includes details on a company’s:
- Management team
- Business plan
- Legal history
- Compliance history
- CSR activities
- Market presence
- Technology stack
- Customer base
- Market trends
Why do companies perform due diligence?
Due diligence is performed by many different types of organizations such as private equity firms, venture capital funds, hedge funds, banks, law firms, government agencies, and corporations. The reason for performing due diligence varies from one organization to another and includes fraud protection, minimizing risk factors, assessing legal challenges and evaluating the risk of regulatory changes.
What are the benefits of using a tool to automate your due diligence?
Industry leaders strongly advocate the use of AI to enhance the DD process within companies. Aside from freeing up valuable time, tool-driven automation reduces multiple other inefficiencies. A few key benefits are:
It saves time
The amount of time it takes to complete due diligence manually is often underestimated. Using a tool, you can significantly reduce the hours spent on document review and still get accurate and relevant insights.
You get better results.
A well-designed automated system can deliver better results than a person performing the same task manually.
It reduces errors and improves accuracy.
Automated systems are far less likely to make mistakes. Thanks to AI and Machine Learning, automated due diligence has taken massive strides towards accuracy.
It increases productivity
Automating your due diligence helps you increase your productivity. You can now focus on the problems at hand while the AI focuses on the paperwork.
It lowers costs
Automated systems are cheaper than hiring professionals. For example, the cost of hiring a lawyer to review a document is higher than the cost of letting an AI-powered tool do the same.
It makes you more competitive.
If you want to stay ahead of your competitors, you need to keep abreast of new developments in the market. One way to do this is by automating periodic diligence checks.
It gives you peace of mind.
When you know that all your information is at your fingertips, you can confidently concentrate on other aspects of your business without worrying about missing something crucial.
Read this article to know more about the importance of vendor due diligence
Here are 10 tools you must try if you’re looking to enhance your Due Diligence process.
SignalX is an end-to-end platform that allows users to perform a wide range of automated due diligence checks on entities across various industries. We offer a suite of services ranging from primary screening to advanced investigations. Our customers include banks, investment funds, private equity firms, law firms, hedge funds, venture capital firms, family offices, M&As, IPOs and other businesses.
SignalX is a leading provider of enhanced due diligence solutions for companies looking to buy or sell assets. The platform provides a comprehensive set of services covering all aspects of a deal. We work with our clients to identify risks, mitigate them and build a robust case for their approval. Our diligence reports comprise the following
- Financial strength of the target entity
- Litigation checks
- Comparables and peers
- 60+ business signals
- Regulator notifications
- Connected parties check
- Tax profile and compliance
- Automate valuation analysis
- Forensic and fraud signals
ComplyAdvantage has provided third party risk assessment since 2014. With technology rooted in AI and ML, they perform due diligence checks that are fast and accurate. Some of their core offerings include:
- Customer screening and monitoring
- Anti-money laundering transaction monitoring
- Politically exposed persons screening
- Adverse media screening
- Sanctions and Watchlists
LexisNexis is one of the leaders in third-party risk assessment. With the help of Big Data and Advanced Analytics, the company provides insights that help businesses mitigate third party risks. Some of the checks they offer as part of their automated enhanced due diligence include:
- Adverse media news
- Politically exposed persons (PEPs) monitoring
- Bankruptcy and Delinquency checks
- Litigation history
- Entity verification
- Financial crime and corruption risk
LexisNexis' clientele includes 7 of the top 10 banks and 78% of the Fortune 500 companies.
Signzy is another company that leverages Artificial Intelligence to assist you in your due diligence process. Some of the salient features of their AI engine include:
- Corporate due-diligence geared towards the banking sector
- Digital onboarding for banks, NBFCs and other financial institutions
- Automated risks and regulatory checks
With a history spanning 200 years, D&B is one of the largest and oldest providers of business data and analytics. Some of the diligence solutions they offer include:
- Third-party risk management
- Onboarding and due-diligence
D&B's comprehensive reports run checks on vendors, suppliers non-vendors helping your compliance professionals to adhere to regulations and reduce third-party risks.
Probe42 is an Accel Partners backed startup with members of its leadership team from prestigious IIMs and IITs. The startup offers due diligence services in three main categories:
Tofler's due diligence tool Company360 helps you perform
- Competition benchmarking
- Client research
- Vendor onboarding
It promises a simplified, timely and unified report to give you a bird's eye view of any company. Tofler has been around for over seven years and has served over 15k customers.
Refinitiv's automated due diligence incorporates both standard and enhanced checks. They source their data from trusted partners globally with support for 65 local languages. With a team of over 500 analysts and 20 years of experience, Refinitiv is one of the formidable names in the due diligence sphere.
Kroll helps businesses anticipate, detect and respond to risks associated with compliance and ethics with the help of their dedicated due diligence tool. Some of their comprehensive solutions include:
- Anti-Bribery and corruption Check
- Anti-Money Laundering Check
- Third-party due diligence
- Mergers & Acquisitions transactions
- Supply chain Due Diligence
Control Risks has a global team of investigative professionals who perform enhanced due diligence checks to give a wholesome, accurate and contextual view of any target. Their clients include some of the world’s most prominent institutions and corporations.
Due Diligence is often viewed as a tedious task, but it doesn't have to be. Using a tool to automate your due diligence processes can save time and money while ensuring that all aspects of your investigation are covered.
You may also want to know about the 5 due diligence checks you must execute on your vendors and partners.
Find out how AI is redefining due diligence.
Can You Automate Due Diligence completely?
The due diligence process can be automated to a great extent. However, there are still certain aspects of it that need to be manually scrutinised. AI-powered automated due diligence tools like SignalX help you accelerate your due diligence effort and channelise resources where attention is needed.
How long does it take to complete Due Diligence?
The time taken to complete due diligence depends upon the size of the deal, number of parties involved, type of transaction etc. It also varies based on how much information you want to gather about a particular party or entity. At SignalX, we perform over 200 checks on any entity within 12 hours.
What is the best way to do due diligence?
There are multiple ways to conduct due diligence. However, the most effective way is by conducting a thorough analysis of all available information, including public records, social media, online sources, press releases, trade publications, financial statements, annual reports, corporate filings, regulatory disclosures, government databases, etc.
Is there a difference between doing due diligence and background checks?
Background checks are typically used to identify criminal history, employment record, education, credit score, etc. At the same time, due diligence focuses more on identifying potential risk factors such as tax evasion, fraud, money laundering, intellectual property theft, etc.
How can AI help in due diligence?
AI-powered due diligence tools like SignalX have been designed keeping in mind the ever-changing nature of business and technology. These tools use artificial intelligence to analyse large volumes of data quickly and efficiently. This enables them to provide actionable insights into the company/entity being investigated.
How can SignalX help you automate due diligence?
SignalX uses machine learning algorithms to scan through millions of documents and find relevant information for each entity. The process takes about 12 hours per entity.
Does SignalX work only for startups?
No! We have helped many corporates with our due diligence services. Our customers range from small start-ups to established companies.
Are you able to help me with my specific problem?
Yes! If you have questions related to due diligence, feel free to contact us at firstname.lastname@example.org.