Board Due Diligence Today: Passing Muster is Tougher
A Conversation Between Christopher P. Skroupa, Skytop Editor-in-Chief, and Julian Grijns, Managing Director in the Investigations, Diligence and Compliance practice at Kroll / January 1st, 2025
Julian Grijns is a managing director in the Investigations, Diligence and Compliance practice of Kroll, based in the New York office. With over 20 years of consulting experience in complex matters, Julian is an expert in gathering information from disparate sources and identifying patterns of misconduct. Julian’s experience is founded in rigorous research methodologies and years of strategic analysis of corporate operations.
He has participated in numerous diverse engagements, serving clients that include private and public entities, financial services and law firms, and high-net-worth individuals with asset recoveries, domestic and international due diligence, litigation support, employment issues, and business intelligence.
Since joining Kroll in 2004, Julian has led and participated in a wide range of assignments, including internal fraud investigations, the Foreign Corrupt Practices Act (FCPA), counterfeit and intellectual property (IP) matters, asset searches and recovery, transaction due diligence, and business and competitive intelligence matters for clients around the world. Other areas of expertise include litigation support investigations, trade secret theft, proxy fights and hostile takeovers, and employment issues.
Working with Kroll’s Cyber Risk practice, he has led a number of cyber security assessments for mid-market and Fortune 500 firms. His assignments in this area have involved comprehensive assessments of an organization’s protection of physical and electronic data; evaluation of systems, applications and relationships with third parties; and a company’s ability to detect, respond to and mitigate threats.
Christopher P. Skroupa: If one is campaigning to join a board and is seeking what it takes to successfully secure an appointment, what is new about qualifying? Is the bar higher than --say--ten years ago?
Julian Grijns: I think what’s new – versus 10 years ago – is the evaluation metrics are broader, and the issues are not as simple/binary as they once were. Issues such as overboarding, criminal history, direct conflicts of interests were commonplace in the past. I don’t think the bar is higher now, it’s just that activists are being more strategic and have improved the quality of their candidates. More diligence is taking place, and in some cases, there is a longer period of dialogue, or at least an effort at a dialogue. Corporates are certainly more attuned now to using the proper range of legal and other advisors to evaluate the activists, their intentions and nominees. So, all that said, the candidates must withstand a lot of scrutiny.
Chris: Tell me more about due diligence and one's personal life. I read about candidates having to defend, say at the age of 50, what they did at the age of 20 in their fraternity or sorority. What is driving this?
Julian: Over the past 10-15 years, there’s been an overall increase in what I’d call sensitivity to personal issues. Across all our work – not just in activist related matters – our clients care about personal, cultural and management/personality issues. Shareholders and investors realize and have seen that such issues can have a tremendous impact on value, so they want to know about them. They want to understand the context around them and that issues – even from 20 to 30 years ago – are either isolated events or a sign of a pattern of problems.
Chris: Regarding independent board member expertise, how should a candidate be prepared to present their value in a particular area needed to support a company's strategy?
Julian: First and foremost is either direct industry experience relevant to the particular company and/or experience that could have an immediate impact on the company’s needs. The targets of a certain activist campaign may not need relevant industry experience but instead they need M&A or specific turnaround/restructuring experience. So, a particular candidate’s value to the company can vary. What is essential, and may sound obvious, is an accurate presentation of the candidate’s experience, particularly among candidates making specific performance claims. We too often find inconsistencies, nondisclosures and misrepresentations in the presented biographies of candidates.
Chris: On the issue of personal matters, why has a person's past relationships become a reflection of character in qualifying them for a board appointment?
Julian: Guilt or reputation by association can be powerful. Should it be as powerful as it is? Probably not because there is typically more context around relationships than what is being portrayed in the media or in the public record. Our job is to quantify, qualify and contextualize the relationship, and there is a broad spectrum of course to evaluate. There are certain public figures where an association can be a clear and definitive deal breaker and others where performing a comprehensive investigation is critical. A pattern of associating with disreputable individuals or companies can be a clear qualification issue.