Due diligence is the most important element of a successful corporate acquisition. Experienced strategic and private equity buyers know how to examine a company’s assets, liabilities, product lines and future prospects, so they have a grasp about what they’re getting into. However, those same buyers don’t necessarily know how to peek into a company’s closets to see what kind of skeletons – litigation, citations, histories with customers, employees and competitors – might be lurking.
That’s where the Milwaukee-based private investigation firm Armitage & Associates Investigative Services Inc. can help.
“We usually get a call from (equity investors) or an attorney that’s working with a private equity firm,” said Michael Armitage, owner and lead investigator of the firm. “A lot of people don’t do this part of (due diligence). They’ll do due diligence on the financial side. We do the other side.”
Armitage is a former investigator for the FBI. He started his firm in 1988 with a focus on corporate clients. The firm does not handle divorce, accident or other investigations involving personal litigation.
The company’s investigations and background checks usually begin with Internet searches of news stories, use of subscribed databases and criminal background searches. Once those are
done, the firm moves on to more sophisticated techniques, including interviews with former employees, suppliers, customers, neighbors and associates.
“We’ll start with public records and then move to public and fee-based resources,” Armitage said. “We also look at litigation and regulatory records.”
Generally, owners, chief executive officers and other managers know they’re being examined and will sign a release form allowing thorough background and credit checks.
“If they don’t (sign a release), I’d run the other way,” Armitage said.
While the executive being looked at might give investigators a list of people to talk to, Armitage usually tries to develop additional contacts to widen his net of information.
“People are very careful about what they might say,” Armitage said. “It’s the art of trying to get people to open up.”
In total, Armitage & Associates has 10 employees, six of whom are licensed investigators.
Most of the company’s employees work is in its mortgage fraud division, which started about three years ago.
Clients in that division include banks and lending institutions that want to find mortgage fraud, generally when a foreclosure happens, Armitage said.
“We’re really busy,” he said. “And I still see an increase in it. There’s been the refinance boom in the last year or two, and now interest rates are going up. A lot of things are going into foreclosure.”
About three years ago, before it offered mortgage fraud investigation services, Armitage & Associates only had two to three employees, Armitage said. The firm will likely hire another two employees this year. It’s also courting several new clients for long-term projects.
Armitage is also a security representative with the National Football League, handling security duties during Green Bay Packers games. Armitage and the security representatives from other teams around the NFL worked for two weeks in Miami for this year’s Super Bowl.
His contacts within the NFL, the mortgage fraud investigation world and former FBI agents give Armitage’s Milwaukee-based firm a nationwide network of investigators to tap into for information in other cities. That information is often needed during the due diligence process, Armitage said.
“We’re part of a nationwide network and use investigators all over the country,” he said. “We need someone who’s been there a long time and is familiar with the business community.”
Armitage’s various connections have given him access to investigators in other markets during the due diligence process. When a client was looking to purchase an East Coast company, a former FBI agent was able to assist. But when another client was looking at making an acquisition in England, Armitage was able to use his NFL network, through the league’s European division, to find an investigator there.
“We found an investigator there in about 20 minutes,” he said. “Sources and contacts is the name of the game.”
Armitage and one of his investigators, Thomas Wagner, have built a network of sources that also has helped find contacts in China.
Although Armitage & Associates has been able to grow through its work in mortgage fraud investigations in the last few years, Armitage wants to devote more of his time to corporate services, including due diligence work.
“I have to relinquish some control of the mortgage side,” he said. “Fortunately, I have good people to run it.”
Armitage & Associates Investigative Services Inc.
Address: 611 N. Broadway, Milwaukee
Industry: Private investigations for corporate clients
Employees: 10
Web site: www.armitage-associates.com
