The Importance of Due Diligence from a Business and Personal Standpoint by Ron Parikh
Posted by: Ron Parikh
27th Jun 2016
We all know someone that has had a bad experience, in part, because they didn’t do the necessary legwork. I’ve been in the same position, myself. When I was a teenager in high school, I worked in a grocery store and saved enough to buy a car. My dad and I went to a local dealership, and I spent $5,000 on a used red Mazda MX6 and I was overjoyed. The problem was, that I bought the car in the winter, and it wasn’t until summertime that I realized the air conditioning didn’t work. In that moment, I realized that I hadn’t done my due diligence when I bought the car. That lesson sticks with me today and I strive to pay very close attention to every detail of every deal I make. Not only does this benefit me, but it also benefits my business partners within and outside of CMG.
My experience in buying that defective car, led me to understand how important it is to pay attention to every detail. I was inexperienced and I didn’t have a firm grasp of the basic principles of due diligence. It’s a simple matter of doing adequate research and analysis of a business transaction. In the case of the car, I missed a simple step, which was to have a qualified mechanic give it a once-over. Had I taken that step, the air conditioning issue would have been found and repaired before I made the purchase. As one of the Managing Directors of Chalak Mitra Group of Companies, I am very aware that my actions have a direct impact on everyone. If I miss something, no matter how insignificant, I put myself, my partners, our investors, employees and families at risk. We stand to lose financially, but we can also lose something more important, which is trust. Therefore, I never skimp on due diligence.
Time Is Critical
One of the most important pieces of advice that I can give you is not to rush into anything. When you’re feeling pressured into making a decision, there is a tendency to gloss over the details. You’re more than likely going to miss that little phrase in a contract that costs you more money, or takes away some of your rights. Likewise, there may be similar phrases that are detrimental to the other party. Take the time to truly evaluate every contract, every proposal, that comes your way. You may ruffle a few feathers by not wanting to jump at an opportunity, especially if it’s presented by a friend, or trusted colleague, but that’s okay. Stand your ground and never feel pressured to jump into a deal without the opportunity to fully comprehend what you’re signing.
Everyone Must Benefit
Every deal, no matter how large, or small, involves multiple parties, all seeking to gain some benefit from the agreement. Whenever I get involved with a new brand acquisition, for example, I look for ways to assure both parties gain from the deal. Any hint of a deal being unbalanced, is grounds for further research to find a more balanced approach. It is simply unacceptable, for me and everyone at Chalak Mitra Group of Companies, to enter into a deal that is detrimental to either party. We approach every opportunity with open, honest communications and a willingness to adjust accordingly. Only when there is mutual benefit, agreed upon by both sides, will we take steps forward.
Whether you are contemplating multi-million dollar deals, or you’re just looking to buy a nice used car, always do your due diligence. What looks good on the outside, like that little red Mazda I bought, may be hiding an unpleasant surprise on the inside. Never rush into anything until you have had enough time to do your own research, or talk to someone who has more expertise than you do. Most of all, make sure that every contract, every acquisition, every small deal is beneficial to everyone before you sign on the dotted line.