Helping companies do the best possible due diligence

Hello, I'm Charles Bacon... Who am I and how did I become The Due Diligence Guru™?

Corporate Speak

If you want corporate speak, I have extensive experience in risk analysis, fraud prevention, advanced technology, new product development, and I’m a proficient corporate and financial engineer. I’ve been involved in business and technology for 35+ years at Board and senior operating executive levels, managing diverse businesses and strategic alliances. I’m a generalist, or if you want the scientific term, a polymath. I have written and spoken on topics such as due diligence, business decision making, venture capital, artificial intelligence, technology transfer and competitive intelligence.

Learning About Fraud First-Hand

Here are the details. In 1984 I had the dubious pleasure of learning what it is like to be defrauded by a con man, I lost $85,000, and I had my first education about the fraudulent world. Trying to get my money back turned out to be a second education for me. I found out that this guy defrauded several dozen firms in the area, and lots of folks were running after him! I ended up working closely with most of them, and then coordinating everything with the local constabulary. This guy obviously knew his stuff, because when the law got close enough to have a real case, he left the state before he would have been arrested. I also learned that fraud is huge, massive, unbelievably large, really, really, really big… well, you get the picture.

After the guy jumped the state, a bunch of us had some “crying in your beer” conversations, including some of my new friends from law enforcement. They told me that once the con man skipped the state, only the FBI could chase this guy because of jurisdiction and budget. I complained that there wasn’t anywhere to go to help businesses stay out of trouble before it happens, and I put forth the question: "Why isn't there a private version of the FBI." One of the detectives said “Why don’t you do it Chuck. You did as good a job as I have ever seen in putting together the case and coordinating everybody.”

Fraud Busters, Inc.

That was the beginning of Fraud Busters, Inc., which I founded in 1984, (how could we resist the initials!) and several of the law enforcement people who were involved in the case joined the firm. I created Fraud Busters, Inc. to provide proper proactive fraud prevention services so that losses and exposure can be minimized, and therefore profits and savings can be maximized. Our mantra was, Fraud Busters can help you stay away from trouble by performing front-end verifications of the abilities of companies or individuals to perform as stipulated in business, financial or employment agreements.

We had a great bunch of people on the team and on contract, with lots of experience in investigation, insurance, accounting, legal, financing, corporate structure, Boards, management, ex-law enforcement, including some ex-FBI people. We had clients encompassing the financial community, private and public companies, firms seeking capital from outside sources, commercial insurance firms, and corporations involved in acquisitions, mergers, joint ventures, and other risk-taking operations, from mom & pop to the Fortune 500 such as Pepsi-Cola and Taco Bell.

However, early on it became quite frustrating to me that essentially all our clients did not hire us for our proactive services, and they had great difficulty justifying the expenditure of funds before the losses and exposure! After “the horse left the barn” everything was different, and then they needed us. Of course, the costs to the clients were significantly higher than if they had hired us beforehand to help them become less vulnerable to losses through fraudulent activities.

Due Diligence, Inc.

Seeing how the Fraud Busters message was received, in the late 80s I decided to expand my ideas and created Due Diligence, Inc. in 1989, incorporating it in 1990 to pioneer new concepts of what I termed at the time, management due diligence. To date at Due Diligence, Inc., I have managed several hundred client engagements for small firms such as Mr. Business Card, to medium-sized firms such as Coopers & Lybrand, to large multinationals such as IBM, and British Aerospace, with client project sizes ranging from small fraud prevention inquiries to corporate engineering to business diagnostics to financial engineering to risk analysis to strategic support for a $2+ billion aircraft portfolio.

The New Science of Due Diligence

During the Fraud Busters era through the early years of Due Diligence, Inc., I kept looking for tools, systems, and any sort of hard science of due diligence. Lo and behold, I could not find anything! Sure there are tons of checklists, even a few books about what I now call traditional due diligence, but absolutely no formal science! So far, I have also been unable to locate any university courses solely dedicated to due diligence! If anyone knows of any university courses, please email me right away.

So, in 1993 I started a formal scientific research and development endeavor to systematically study due diligence from all possible perspectives. I built and tested many ideas, hypotheses and theories, later designing initial constructs, and later designing complete system structures. Understanding the complex dynamics of an organization requires a truly multidisciplinary approach. So, over the many years, I studied a number of disciplines, including artificial intelligence, mathematics, expert systems (now known as business rules), neural networks, genetic algorithms, evolutionary programming, decision trees, adaptive practices, data mining, Bayesian networks, natural language processing, pattern recognition, artificial life, fuzzy logic, simulated annealing, nonlinear systems, topology, self-generating algorithms, general systems theory, cybernetic algorithms, complex adaptive systems, chaos theory, all the statistics methodologies, and many other areas of science. None of these approaches accomplishes the task, although some parts of these approaches are useful. I took my own ideas, pushed the cutting edge of science, and finally a new paradigm evolved from my insights and became the foundations for a new science, Emergent Intelligence™, a set of principles that unifies complex systems.

Next Generation Due Diligence

Along the way, I wrote an article called Next Generation Due Diligence™, published by invitation in the Due Diligence and Risk Management Journal. A shorter version of this article, focused solely on mergers and acquisitions, was published earlier, and also by invitation, in the M&A Advisor. In 'Next Generation Due Diligence' I propose organizations go beyond traditional due diligence, with all its limitations, and embed the 'Next Generation Due Diligence' process inside organizations, working all the time instead of just during a few corporate events like selling the company or taking it public.

I founded Due com in 1999 as an R&D incubator, incorporated it as Due com, Inc.  in 2000, and since then, Due com has spent over $1.7 million to develop and refine the science of Emergent Intelligence and several applications in different markets.

New Due Diligence Products

I set up a license agreement for these technologies from Due com to Due Diligence, Inc., and now Due Diligence, Inc. is starting to bring Next Generation Due Diligence products to market starting in late 2006. When all the new Next Generation Due Diligence products are completed over a several-year period, Due Diligence, Inc. will be marketing a variety of these technology-enabled due diligence systems, which will assess or analyze any type of business process or event for companies from the earliest stage to emerging growth firms to medium-stage companies to the F500.

Everyday Due Diligence™

So there’s my history from the due diligence perspective. What does this mean? Next Generation Due Diligence can maximize the understanding of the pressing business needs all organizations experience. Due diligence should be an everyday process, always working to help people make better decisions and better organizations.

The Due Diligence Guru™

So, to finally get to the question posed at the beginning of this article, 'Who am I and how did I become The Due Diligence Guru™?', when it came time to pick a name for this blog, my new friends at Know More Media suggested a number of names, with www.duediligence.guru at the top of the list. At first I resisted this name, because I remember back when lots of people called themselves gurus who were frauds, and so this initially had a negative impression on me. Also, I am not someone who chases publicity. I talked with my closest and most trusted associates, and they all said two things. One, they did not know of anyone else like me, and two, that I 'should go for it!' They pointed out that I have done more in and around the topic of due diligence then anyone they know of. And, we have been looking for more than two decades and haven't found anyone else yet. I have invented new ideas and technologies which bring due diligence to an entirely new level, even a new science. I'm filing at least 15 patent applications over the next few years. I have talked to hundreds of people on multiple continents to see if there is a firm like Due Diligence, Inc., or a person like me who has a substantial career in due diligence, and so have not found any such firm, or such person. So, in the opinions of lots of people in my network, my history and accomplishments qualify me to be The Due Diligence Guru.

Charles F. Bacon, CEO & Keeper of the Vision
charlesbacon <at> (at) superdiligence (dot) <dot> com
Due Diligence, Inc.
www. superdiligence (dot) com