How do you perform a background check on a business?

Question

How do you perform a background check on a business before you invest with them? I buy a D&B report on the company, check with the BBB, check references, check with the state to make sure that they are a legal entity and have a business licence. If they are offering an investment opportunity then I check to see if they're registered with the SEC. I will check with REIA members to see if anyone knows about the company. What else can you do check out a company?

N/A N/A · Answer

You can also hire a professional firm that specializes in running background checks on individuals and teams.  There are several out there (such as First Advantage, which I can refer you to some good people there, EOS consulting, and a few others, just google them), but the costs may be too much for an individual investor.  The most expensive is First Advantage, which will cost probably around $3k per person for a full background check, but these guys are very GOOD (very, very detailed, down to how many parking tickets a person has in a particular city).  The cheaper ones are around 1K – 2K in cost, and I think those should be OK if you’re just looking for major criminal or civil infractions.

If the person you are looking at is registered with the NASD, you can see their history of major offenses and infractions via the NASD website (it’s called the NASD Broker Check:  http://pdpi.nasdr.com/PDPI/ ).  That is prob. the best source if the person is registered.