Due Diligence Hall of Shame – The other guy checked them out
I’ve been collecting articles that illustrate some of the best reasons for conducting due diligence and some of the best examples of due diligence mistakes. It’s time to share these with you, starting with the missteps by Walgreens executives when vetting Theranos, prior to their soon-to-be doomed partnership .
As reported by the Wall Street Journal, before announcing the partnership in 2013, some Walgreens executives had their doubts about the firm. The veil of secrecy surrounding their technology and the stonewalling on the part of Theranos when asked for information raised some red flags, as they should. But Walgreens kept on going because – and here’s the kicker, which makes Walgreens the first to earn their place on our due diligence wall of shame:
“If Safeway trusted Theranos, then Walgreens could, too, the Walgreens officials believed.”
So, just in case ignoring the excessive-secrecy red flags wasn’t enough, Walgreens committed the cardinal sin of due diligence – assuming that someone else must have already checked out a firm or individual.
If that were true, we wouldn’t find fake college degrees so often. When I discover a “seasoned” (over 50) hedge fund manager’s non-existent MBA, I wonder if I’m the first investigator to actually check them out during their long career. Apparently so. And if they have been investigated, remember that not all background checks are the same.
Don’t become a candidate for the due diligence hall of shame. Never ever assume, and – even if someone tells you they’ve already done a background check – always make sure you check again.