Building the Investigative Practice
by Edmund J. Pankau


In addition to legal and insurance clientele, the investigator seeking clients on a continuing basis (and this is the best way to develop a long term business) should plan to to market to the corporate world. You see, the business of business has become getting information on someone else's business; rivals competitors and their key employees.

Rather than develop new ideas and products, the newest way to corporate growth is to acquire the best plans and people of the competition, by merger, acquisition or a little competitor intelligence (a kinder, gentler word for what used to be called industrial espionage).

Several years ago, an attorney for a prominent public conglomerate called me to his office to try to find a solution to a problem that his megabuck client had been trying to solve for several years. A privately owned company had invented and patented a product and process that could revolutionize the lubrication industry and take a major market share from his client. Recognizing the potential value of the small company's idea, Intergalactic offered to buy the product and process and the entire company, lock stock and barrel, if need be, so that they could be the one to be the market maker of this fantastic new product. There was just one problem, the company did not want to sell. They wanted to control their own destiny, develop the product themselves and wanted no part of a big company culture.

When the company ran out of ideas, their attorney asked me to find a way to get some of the owners stock, even one share, so that his client could get a toehold in this maverick little company (with even one share of stock, Intergalactic could then attend stockholder meetings, vote on company issues and be privy to the daily activities of their target).

The documents of the Secretary of State showed five corporate officers and directors as owners of the company stock, with no stock issued to outsiders. Knowing that the employees had already turned down the offers of Intergalactic Industries, I searched the court files for divorces of the known stockholders, to see if any of them had been the victim of a court division of property. Sure enough, one of the company founders had been through the wringer three years before, and his assets had been partitioned by the judge. A review of the divorce decree showed that the wife had been awarded half of the husband's 100,000 shares of common stock. BINGO! Two days later, I met with the former wife and offered her five times what she thought the stock was worth. (The company, never considering the possibility of a buyout and had not required buyback agreements of the company stock or offered to purchase the stock after the divorce.)

With their hands on a block of company stock, Intergalactic Industries flooded the company with requests for financial filings and soon made it so miserable on the company that the founders sold out for a small fortune and retired. Intergalactic got their product, and the ex-wife is now living somewhere on the West Coast overlooking the bay.

When you make your plan to develop business and corporate clients, target not one, but many of their needs. Let your client know that you can help them in many ways, including:

APPLICANT SCREENING: Help you client hire the best job candidates, by weeding out unqualified or problem applicants who have had a history of criminal or civil litigation, financial or driving problems that could affect their employment and job performance.

DUE DILIGENCE: Before your client jumps into a major business merger or acquisition, they need to know about any problems that their new company or their officers haven't disclosed, such as lawsuits, tax deficiencies, regulatory problems or divorces that may affect the value of the company and the pricing of the deal.

COMPETITOR INTELLIGENCE: By keeping an eye on the competition, you can often get a big jump on them, just by being a little nosy. A good investigator can find out if a competitor is hiring or laying off employees, buying property for new facilities or announcing new products or expansion of a service or product.

A new trend that I am seeing in the investigation business, is the addition or replacement of a contract security director on a consulting basis. With much corporate resizing going on, many companies who want the skills and benefits of a trained professional can't afford their full time services. The solution, already applied by several of my professional friends, is to offer these companies the ability to have their services on a part time basis for a reduced monthly management fee.

The company gets up to 25 hours of service a month, has a name to put on the title of Corporate Security Director, and saves on benefits and salary. The consultant now has continuing income from several corporate clients and can use this position to make contact with other companies that want his services on an as needed basis, paying an hourly fee. This is what is known as a win-win deal!