Written by David Wilford
Posted on 29/01/2015

Revealed: Why a Director Search is vital

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A director search is very simple to do, but the resulting report can be extremely valuable, listing any UK director’s current and previous companies – including any failed businesses from the past. By gaining real insight into its directors’ histories, you can make properly informed decisions about whether or not to deal with a business.

Searching for information

At the beginning of all the early episodes of the seminal 80s TV cop show Hill Street Blues, Desk Sergeant Phil Esterhaus always told his officers “Hey, let’s be careful out there…”

This sentiment holds true today for anyone planning to work with a new company, whether as a supplier, a partner, a customer, an employee or an investor. In such cases, it’s increasingly second nature to carry out a so-called “company check” on its trading and financial history.

It’s the people that count

But companies are made up of people, and it’s also important to establish precisely who you’re going to be dealing with – starting at the top with the company’s directors. This is where a “director search” comes in, helping you to see details of all past and present directorships, including those of failed businesses.

Most important, a director search will also reveal whether or not an individual is disqualified as a director, whether they are personally bankrupt or currently under a bankruptcy restriction order. If any of these are the case, it is illegal for them to be a company director and you should rapidly extricate yourself from having anything to do with them.

Credit risk

Fortunately, it is easy to get hold of such information from a range of vast online databases whose accuracy is assured by information feeds from government and other sources including Companies House and the County Courts. The Graydon company director search, for example, provides an accurate and up to date view of over six million director and company officer appointments within UK registered companies.

What’s more, it’s the only director search that also gives a credit risk summary of all active companies. Of course, more often than not matters are not totally cut and dried. Your search will reveal whether or not the individual has a broadly successful history or a past littered with blind alleys, closed companies, bad debt and lost investment funding. While not definitively determining your way ahead, this should help you decide whether or not you are happy to progress or should head for the hills.

Busting the myths

It is important, however, to address a couple of myths in this area. Just because a director has one or more failed businesses in their past does not automatically make them an incompetent or, worse, a dishonest operator. They might have been unlucky – possibly affected like so many by the downturn following the financial crisis of 2008. Or they might have learned from past experiences to become a more practised and skilful operator.

Also, it is not against the law for a director to run a new company – often called a “Phoenix company” – using the assets of a business that has previously failed.

So, in most cases, the judgment as to whether or not to deal with business will be yours. But, at the very least, a director search gives you the insight and transparency needed to make an informed and evidence-based decision. It will give you detailed background knowledge on individuals which could be useful in all future dealings. And it will help you to protect yourself and your business against the risk of dealing with inappropriate people or organisations.

In short, it’s a vital tool in ensuring your own business success.

Do you want to know the background of certain directors of a company?

Conduct a Director Search