Doing Diligence
by David DeJean

| | Finding company information is not an easy thing to do on your own. | | | Let your fingers do the walking, and your mouth do the talking. |
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Finding company information necessary to make a job decision is harder than writing a three-page high-school history paper on the causes of the Spanish-American War. But it's a lot easier than piecing together the evidence in a hard-boiled whodunit.
But that's as it should be. You're facing a decision that will be a lot more important to your future than the events of 1898. And, you want to make sure no one gets away with murder, especially where your career is involved.
Doing due diligence on the companies you're interested in involves three major levels of difficulty:
It's easy to find out a great deal about public companies. The 10-Qs and 10-Ks and other filings required by the SEC, the press releases and news coverage, the reports of industry and technology analysts all makes for an endless flow of information about what the company says it's doing. Just remember, you have to pan a lot of dirt to collect the nuggets that indicate what the company is actually thinking.
Pre-IPO companies are tougher. Not only is there no SEC paper trail, but the track record of an interesting company may be measured in weeks. You have to be a Sam Spade to get to the facts on a startup, and it will require more indirect methods and judging the opportunity by the company it keeps.
Finding companies to be interested in can be the hardest -- circling around an industry segment or a technology trying to pick up the trail of a company that doesn't even know it needs you yet. You have to cast the widest net here, and, like Sherlock Holmes, consider the significance of the dog in the nighttime.
Doing due diligence these days also involves you in heavy Web surfing. The Internet has quickly become the primary source for financial, organizational and market-related information about businesses.
Print isn't entirely dead. There are print sources that will help -- local and state business directories, for example, aren't readily available on the Web. And making a friend of your local reference librarian can help a lot. But you may find the best use of your library card is for checking out the latest Nicholas Kilmer mystery. Get ready to let your fingers do the walking in your search for company information.
Public Companies
Where there is money, there is information. The most money is in publicly traded companies, so it's no surprise that's where the most information is, too. The challenge is to collect it efficiently, with as little wheel-spinning as possible:
Hoovers Online Start here. Hoover's Online provides the best integrated look at company financials, press coverage and SEC filings that are the meat of what you can learn about a company online.
Edgar Online 10-Qs and 10-Ks, IPO filings, prospectuses and more. This is a great natural resource -- the largest single deposit of boilerplate in the world. Most of it is intended entirely for public consumption, but read the sections on market plans and challenges carefully, because this is, after all, the Kool-Aid the company itself is drinking. Edgar Online is particularly good about names. Here's where you can find out who's been nominated to the board of directors, who all the VPs are -- names you can run by people you know and trust for their reactions.
Bloomberg Hoover's Online for depth, Bloomberg for breadth. The leading financial trader information system gives away a generous sample for free online. For a quick but solid information hit on a public company, check out the Bloomberg Detailed Quote. And use the search feature to look for news about your suspects.
Press releases Companies tend to be customers of one or the other of the two major press-release distribution services -- BusinessWire or PRNewswire. Both offer archives of releases searchable by company name, with links to company financial info as well. PRNewswire also serves up some general news.
The national business press Work the search engines of The Wall Street Journal and New York Times; search for company articles, then search for articles about the people named. Ditto the Big Three business periodicals, BusinessWeek, Forbes, and Fortune, and one strong online-only source, CNNfn.
Brokers and analysts Don't forget to use the resources you're paying your broker for. He has access to vast information resources, and can often get you for free reports that you'd otherwise have to pay for.
Pre-IPO Companies
With pre-IPO companies, who they are is as important as what they say -- especially since most of them haven't said much in public. Don't overlook the obvious: Start with the company's own Web site, and read it closely. Look in particular for names of the principals and the sources of its funding, then plug those names into the search engines.
Search engines The good ones include Yahoo!, Google, Alta Vista, and Northern Light. A convenient start page for searches is The Reporter's Desktop -- it's a page of links to Web information-gathering tools maintained by a newspaper editor and intended primarily for his brethren in the Fourth Estate, but that doesn't mean you can't use it. There are lots of convenient links to yellow pages directories and maps and similar resources as well.
Trade News A quick source of info on IPOs and venture capital deals is IPO.com. RedHerring and HotWired also specialize in serving any IPO or VC tidbit they can find while it's hot. The one-two startup markets are Silicon Valley and the Boston suburbs, and the local papers do good jobs of keeping up online. For the West Coast, see SiliconValley.com run by the San Jose Mercury, and for Route 128 on the East Coast, digitalMASS, a section of the Boston Globe's boston.com.
Silicon Anywhere Local business papers provide an alternative source of information about small companies and cities far from the centers of power, and the Web makes these accessible nationally. The City Business Journals are available on a unified site, and they have some online-only competition from dbusiness's LocalBusiness.com.
Industry media Trade publications and their Web sites are a natural source of company names and more. If your interest is high tech, for example, check ZDNet, C|Net, IDG.net. Look for not only for coverage of new products, but for the names of customers and strategic partners quoted in the stories. Every industry has its trade press, and the bread and butter of every trade publication is companies and their customers
Monster.com -- Lest we forget the obvious, check the jobs your target company has listed right here. Even if your very own dream job isn't listed, the number of openings and types of skills the company is looking for can tell you a lot about what the company's real intentions are. Is a hardware company looking for software engineers, or a Microsoft shop building Linux expertise? Do some reading between the lines about product plans and staffing levels.
Finding Companies
For Sherlock Holmes, the significant thing about the dog in the nighttime wasn't that it barked, but that it didn't. For you, finding the companies that aren't clamoring for your attention can be a similarly difficult bit of detection -- and equally important.
Researching companies to be interested in begins with the sources in both categories above. Read the news for interesting company names, then use Edgar Online and the search engines to learn about who they are and what they do. Trade publications are important because they usually find companies long before the mass media do. A couple of other sources are available, as well:
Research consultants and analysts -- These are the companies that help big companies look into the future to formulate technology and market strategies, and generally charge big bucks for their reports. To use the high tech sector as an example again, check Forrester Research, IDC, Patricia Seybold, Jupiter Research, the Yankee Group, the Gartner Group, Gomez Advisors, and the Aberdeen Group. You can't afford their services, but you can read their press releases for free. Scour their sites for names, companies, and, very importantly, ideas and trends.
Trade shows and conferences -- Another good online source of names and companies: Find a tradeshow in your field, then find its Web site. Sign up for an exhibits-only pass (usually it's free), even if you have no plan to journey to the show itself. Then look closely at the lists of speakers and exhibitors, kick some virtual tires and take some names. There are several Web sites that will get you started: Yahoo Conventions and Conferences lists events. TSNN.com lets you search for tradeshows in almost 150 categories. BusinessWire offers the Tradeshownews.com calendar. Conferenza reports on news from technology conferences and trade shows.
The pre-Literary Tradition
Finally, don't neglect the oldest way in the world of acquiring information. Talk to people. Talk to the people you know, and talk to the people they know. Word of mouth. Talk to employees, former employees, customers and suppliers if you can find them. And remember that the Web has a pre-literary tradition as well -- the newsgroups. Plug the names of companies and people into the search box of DejaNews, the largest archive of Usenet newsgroups and other message forums on the Web. Only when people stop talking is your due diligence done.
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