Due diligence vital for deals

CHECK THE INTRICATE DETAILS OF THE DEAL AND ITS PROPONENT It’s not just con artists who have an eye out for unsuspecting people whose resources they can plunder.

Years ago, it was customary and acceptable for agreements, such as business deals, to be sealed by handshakes and the assurance of one’s word. Today, a handshake means little more than a greeting gesture; neither does the phrase “I give you my word” carry much weight.

Fraudsters and con artists are rampant, seeking unwitting targets to cunningly plunder their coffers.

And this modus operandi isn’t restricted to con artists, even genuine businessmen and women have taken advantage of fellow entrepreneurs.

It is, therefore, prudent as an entrepreneur to be wary of whom you do business with.

It requires thorough due diligence on the party that is proposing to do business with you. Who are they, what is their track record and why are they approaching you specifically?

Secondly, if it is too good to be true, then it probably is. There is always something fishy about quick money in abundance and whenever you are presented with a get-rich-quick scheme you must think it through.

If, however, the party and the deal seem genuine you must proceed by diligently reading the fine script. Some deals may look good on the surface, but can cripple your business if you fail to pick up the intricate details.

Risk assessment becomes key because it allows you to identify the potential downside to determine if it is worth the risk.

A million rand more in your business account sounds good, but is it worth risking the entire business and the wellbeing of your employees if it doesn’t work out?

Finally, put it on paper. Believe it or not, there are still people out there who act in good faith, but although you might mean well, it doesn’t mean the other party does. You must protect yourself by signing agreements or contracts.

Jot down every detail on paper and let both parties sign to make it a legal document which you can use in the future if anything untoward happens.

This includes doing business with family and friends, because we have an innate inclination to trust our loved ones.

But money has a funny way of bringing the worst out of people and doing business with loved ones is no exception.

You must treat every deal the same by thoroughly vetting it and thereafter trusting the legal system that is there to protect you, but it can only protect you if you have proof, which you should put on paper.

Munya Duvera is CEO at Duvera Elgroup