In the world of asset finance and leasing, the business of choosing the right private equity partner or company is as important as hiring the right people and getting it wrong can potentially be devastating.
Martin Pashley, chief commercial officer at Kompli-Global, a fraud prevention software provider, says there are a huge number of fraudsters targeting all types of companies, and ‘serial entrepreneurs’ looking to hide their past failures, preventing you from truly assessing their suitability as an investor or partner.
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Companies House is a good place to start, but it isn’t the only way to ensure that you only work with the right people. Here, he offers a few basics for researching private companies:
Do: Look for an online presence
One of the first (but by no means most effective) means of researching companies is a simple Google search. You should be able to find a company website and social media channels: if they have recently posted social media posts, a long history of interacting with other accounts, reviews or news articles, then they are likely to be authentic. The same goes for company directors – it will be very unlikely that they won’t have a presence on LinkedIn.
Do: Check that shares add up
The percentage of shares owned by a private company’s active PSCs (Persons with Significant Control) should add up to 100%. If it doesn’t, that could indicate that the company is fraudulent and has been ‘put together’ badly, or that they have a shareholder who they want to hide.
Do: Check the company’s VAT registration
VAT registration can save a company thousands of pounds and there is no legitimate reason not to do it. If a company appears in Companies House but doesn’t have VAT registration, then this is a major red flag.
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By GlobalDataDo: Check for overseas directors
In many countries, it is significantly easier to forge identities than it is in the UK, so a check on the nationalities of the company’s directors is always prudent.
Don’t: Stop until you have the complete picture
A legitimate company can generate thousands of data points through everyday operations. You can’t have enough information when researching private companies – fraudsters are increasingly sophisticated when it comes to creating convincing fake companies, but anything can be the thread that allows you to unravel their lies.
The key component is being able to do all of the above effectively and efficiently. Therefore, it is recommended that you look to the market for partners that can complete a full audit of companies within seconds, connecting the dots in a way that would take human professionals weeks, flagging all the businesses and individuals connected to a company. This allows you to audit the companies you work with in a faster, more thorough way, giving you the best defence possible against fraud.
