Redefining Due Diligence in Today's World: The SCOUT Advantage

Due diligence is a term we often hear but sometimes struggle to define. In our changing world, however, many organizations find that traditional methods of background research no longer achieve business goals.

We had a conversation with Pinkerton’s Global Investigations Unit (PGIU) Vice President Miguel Martinez and Managing Director Kurt Norrigan to talk about the next evolution in due diligence and why SCOUT by Pinkerton is a game changer.

The first question we have to ask is, “What is SCOUT?”

Miguel Martinez — Scout is a very broad term in the sense that there are a lot of organizations that use the word scout in their day-to-day vernacular or activities. There are baseball scouts that search out new players. There are military scouts that go out before an activity to survey the area and provide information.

Our founder, Allan Pinkerton, was one of the first Civil War scouts. From a historical perspective, he was providing information to the generals and the President in terms of what was happening around the military action during that time. So, the name has a strong significance in our history.

Fast forward to 2023, what does it mean? SCOUT by Pinkerton is the next evolution of due diligence — strategic, comprehensive, objective, unbiased, and trusted.

Kurt Norrigan — In the industry, there are a lot of different words that are used for the same kind of product. Due diligence is the most common, but it also is known by background checks, Know Your Customer (KYC), OSINT, social media monitoring, and others. There’s a lot of different terminology that clients use. It’s basically a combination of all these components (or should be), as well as others that are not traditionally considered.

At Pinkerton, we had several teams working on different types of reports that were all geared at accomplishing the same goals for the client. We had an Intelligence Group, we had an OSINT team, and we had an employment screening team that did background checks; and we had an investigations unit. Rather than have these separate units, we integrated our teams under PGIU. We figured that it would help clients to consolidate all our products under one name, one product, and one platform, with three areas of focus or types of reports: SCOUT Life Safety, SCOUT Investigative, and SCOUT Business.

What is the difference between SCOUT and traditional due diligence?

Miguel Martinez — This is not a cookie-cutter-type approach. SCOUT is strategic and focused on the client’s issues and needs. It’s also flexible because any good scout is flexible. From a military standpoint, the scout has a focus in the beginning; they’re going to observe a location. There might be something that happens at that location or in the battle that changes direction, and the scout needs to go somewhere else.

SCOUT is a living document. It will adapt to the client. We’re keeping an open mind, and we do have a very robust production arm that assesses, designs, and delivers the right solution, which is our way of doing things. We’ve created a product that is uniquely Pinkerton.

Kurt Norrigan — SCOUT goes above and beyond traditional due diligence. Traditional due diligence has been around for a long time. But techniques and technology has evolved. There are dozens of companies online where you can go to their portal and put in the information of the person you want to do a simple background check on. You pay a fee with your credit card, and it will immediately issue you a report. But that’s all automated. It’s all behind the scenes, connected to generic databases. In many cases, this type of traditional due diligence doesn’t achieve the goals anymore. There’s no human touch.

As for us, we’re investigators first, and we provide the human factor. As Miguel said, it starts with the assessment and design aspect. It’s human contact meeting with the client, getting to know exactly what their situation is. What’s their problem? What’s their issue? What’s their need? From there being able to scope out the work that needs to be accomplished.  

One example is SCOUT Life Safety and threat assessments. We have an operational psychologist to conduct behavioral analysis who reviews the research and looks for stabilizers, escalators, and pathways to violence. We expand our intelligence on the person of interest outside of the digital world, through physical surveillance and other field investigations. It’s this human touch that allows us to provide a much more robust product. 

Miguel Martinez — The information we provide is highly accurate and refined. It’s been validated. It’s been vetted. It’s not only content or data, but also a true analysis. We deliver a report with recommendations. It’s a true deliverable that can change a client’s perspective on the transaction or action they need to take.

Kurt Norrigan — We have seasoned investigators and analysts who have been with law enforcement and the local intelligence community for 20, 30, and 40 years and can provide thoughtful commentary, recommendations, and a course of action.

Can you explain the three types of SCOUT reports?

Kurt Norrigan — SCOUT Life Safety are reports that investigate a specific person of interest or group of interest and the potential threat of violence they may represent towards an organization and its people. We’re talking about threat assessments for potential workplace violence.

SCOUT Investigative is an investigation that has to do with some sort of wrongdoing, whether it’s civil, regulatory, or criminal. It’s a specific investigation of some kind of misconduct, such as fraud or corruption.

SCOUT Business is what most would consider very traditional industry due diligence — investigating people, organizations, and groups for business transactions where there are no suspicions of wrongdoing, misconduct, or threat. It’s M&A, mergers and acquisitions. It’s KYC, know your customer or your client. Know your vendor. Know your supplier. It’s immigration checks for people who are applying for residencies or citizenship in different countries around the world. It’s comprehensive background checks and business verifications.

Since there are three different types of reports, is there any difference in how you conduct the investigation?

Miguel Martinez — That’s a good question because it all depends on the situation. What is the situation? What is the ultimate objective for the client?

It’s the same type of information, but the information is being used for a different action. Meaning, the first action, SCOUT Life Safety, is to provide security. It’s going to be very focused on the individual or the group and the potential for violence.

The second action, SCOUT Investigative, might drive an investigation in a different direction. And the third one, SCOUT Business, is more business or transactional. Is the client going to buy an organization for a billion dollars that might have some negative dealings or sanctions? That’s a different scope, and that’s a different objective.

It also depends on the stakeholder who’s reading that report. A security person is going to look just at the potential for the physical concerns, and a lawyer is going to look at morality and the prospect of litigation. An investigator is looking for areas of opportunity to further drive an investigation.

So again, the information might be the same, but the objective and the stakeholder are different.

Why is conducting due diligence important?

Miguel Martinez — In anything you do, you need information. When you’re buying a car or when you’re looking into a school for your kids, you need to assess if there are any potential red flags and determine if this is the right decision for you. Every organization has different goals and different objectives for their business. The key is getting to that, so they make the right decision.

It's critical for organizations to conduct the proper due diligence for any transaction, whether small, middle, or big. Something might seem small, but it could turn into a huge issue for them because they might not have the right information.

That’s really what it comes down to. Due diligence in our world, the legal world, and the business world is there for a reason. If you don’t have anything to back up your decision, then you could lose a lot of money or you can lose credibility. You can cause harm.

How does due diligence help organizations identify potential risks?

Miguel Martinez — When we deliver a SCOUT Report, there’s a lot of data. In some cases, the report could be 20, 30, or 40 pages. Not only do we report the findings, but we also highlight the red flags that we identified, which can be a number of things. It could be sanctions. It could be we found adverse media. It could be corruption or misappropriation of funds. It could be for information to prepare for litigation. That’s why it’s important to understand our clients and how they are going to use the report.

One client requested a SCOUT Business Insight for a company they were considering for a joint partnership. We found a red flag. We found there was litigation against this company, and they were facing fines. Once we had that information, we put together a briefing that focused specifically on those red flags. Then we provided that with our recommendations.

The SCOUT report is just the beginning. If the client wants to know more, then we can put together a more comprehensive investigation, and we can physically pull the record and look at the disposition of that case. Maybe the case was settled, or maybe the company was fined millions of dollars, but that information could give the client more perspective or peace of mind. This company might not be a good investment. And that’s why it’s like a living document because it all depends on what the client wants to do and how they are going to use the report.

Kurt Norrigan — In military terms, generals need scouts to go out to gather information, so they can develop their tactics and their strategy around their battles.

Rarely is a SCOUT Report the only service that we do for a particular project. As Miguel said, it’s just the beginning. SCOUT is the information that allows the client to move forward and deeper or decide not to continue a particular project. From there the client can flesh out their plan, which could include protective services or a deeper investigation. It can be essential for helping clients develop their policies and procedures to better prevent and mitigate certain situations.

Trust SCOUT.

SCOUT by Pinkerton due diligence is designed to meet the needs of even the most complex situations — everything from business transactions and verifications to proactive investigations where there is a suspicion of wrongdoing or threats of potential violence by individuals. Trust SCOUT to provide your organization with the insights and intelligence you need to navigate critical decision-making processes with confidence.