The dearth of readily available information about private companies makes them more of a research challenge for a potential job seeker. From investigative and investment perspectives, though, I like to think about private companies as more potentially lucrative. If you do your homework, you may find important information that others have overlooked or have not been made aware of-information that can help you spot a potentially attractive investment opportunity via stock options or other equity incentives.
Here are key resources for investigating private companies:
Company's Web site
It's truly amazing what you can sometimes discover from a company's own Web site. Many now include information that was once considered highly proprietary-names of key customers and listings of all job openings. Companies are making such information available in significant measure as a response to ever-more-competitive sales and employment markets; they want to impress prospective customers about their existing customers and prospective employees about the wonderful opportunities available. One approach that is useful when investigating a company is to review its press releases distributed to the media. Many companies now post these announcements of new products, customers, and financing and banking arrangements, so reviewing them over a period of six months or a year can provide an excellent chronology of key company events.
Internet Search engines
Punching a company name into several of the major search engines (i.e. AltaVista.com, GoTo.com, Dogpile.com) is a little more of a "needle-in-a-haystack" approach, but it is worth doing. The challenge is that such searches can yield hundreds or even thousands of listings. Foraging through all of them can be a tedious matter, since the one or two that are of greatest interest to you may be at the very end. However, this is usually a necessary first step toward determining what outsiders are saying about the company in question. Using this method, you're likely to come across media reviews of the company's products and services, information on the organization's retail and/or wholesale outlets, and comments about the company by financial experts, among other listings. The actual mix will depend on exactly what your target company does for a living.
Newspapers and Magazines
The ability to search back issues of a growing number of newspapers and magazines represents a huge advance for anyone doing research on private companies because such efforts can yield a bonanza of information. Since you are searching for a company name, the searching process tends to be productive in the sense that you know early on whether or not there are results. The beautiful thing about searching newspapers and magazines is that a single article can provide not only an outside perspective, but often the names of outsiders who are familiar with your company, such as employees, suppliers, and members of the board of directors, since reporters like to quote the largest possible variety of individuals in their own research.
The challenge is to hone in on the most appropriate publications to search. Generally speaking, you should be searching according to geographic location and industry. Thus, if you are seeking information about an early-stage biotechnology company in Cambridge, MA, you'd be well advised to search back issues of The Boston Globe (www.boston.com), as well as magazines and newsletters that report on biotechnology companies. The main limitation you are likely to encounter is that the smaller the publication, the less likely it is to have its database available via the Internet. In some cases, however, the publication will conduct a special search and inform you as to which back issue contained information about your target company-and then sell you that issue for a premium price-perhaps 25% to 50% more than its normal per-issue price. Vertical trade publications make it a practice to cover the cutting-edge technology of the industries they cover. Searching through them online can be valuable for learning whether your prospective employer has the competitive advantage it may be claiming to have.
Court Records
One of the great "finds" from your search of newspapers, magazines, and newsletters can be a reference to a court case of some kind. Once you know about a court case, you can in most cases gain access to key documents that are part of that case-transcripts of testimony, motions for injunctions, defense responses, and so forth-since they are considered "public record." The nature of cases will tell you a lot up front-a spate of sexual harassment charges or vendor grievances against your company suggest a company with some problems in how it treats employees or outsiders. Moreover, whether they are plaintiffs or defendants, companies will often reveal quite sensitive information in the course of court cases about employment policies and business strategies. Newspaper reporters discover some of the most revealing material about companies in court records, and you should, too.
Online Database Services
A number of information databases maintain financial and other data on as many businesses as they can, including large numbers of private companies. Best known among these is Dun & Bradstreet (www.dnb.com). It claims to have information about more than 57 million businesses in 200 countries. Here, for less than $100, you can access the history and business background, and supplier-related information, of individual companies. The main drawback with D&B and other such services is that the information can be incomplete or inaccurate. Some business owners actually provide inaccurate information-usually exaggerating sales or numbers of employees in an effort to boost their images and credibility. In sum, consider accessing such information if you are very serious about working for a particular company, but accept the data with a grain of salt, comparing what you learn to what you are gleaning from other sources.
Patents and Trademarks
The U.S. Office of Patents and Trademarks contains records of applications and awards of patents and trademarks. Here you can check out the truth of what you may have been told by company officials about important patents and trademarks. You can even scan the application forms to see how your company answered key questions, especially concerning the technical aspects of prospective patents. If you're a technical type, you may be able to make some judgments about the uniqueness of and creativity underlying patents.
Present and Former Employees
In any company research, especially on a smaller company, it helps to be able to talk to sources not recommended by the individuals who have been interviewing you. These people need not be in the area of the company where you'll be working, though it helps if they have some familiarity with it. You'll often gain a different perspective of the company from what your interviewers are hoping to project. How do you locate such people? Usually via friends, or friends of friends. In these calls, you should be trying to confirm information you've been given-perhaps about why a key employee is leaving or what a reorganization means or how sales of a particular product have been going. And, of course, you want a sense of how the company treats its employees, and how it rewards success, such as via stock options. Without a connection or reference, it is hard to make such calls anonymously, since employees likely won't trust you enough to talk frankly and openly.
One other approach is to ask the target company if you might speak to one or more outside members of its board of directors or board of advisors. These people are obviously biased in favor of the company, but they are more distant and objective because they aren't there every day, and are supposed to act more as advisors than as executives. They will often be helpful in providing a sense of how well the company is doing and how realistic the company's objectives really are.
Customers and Suppliers
Individuals at customer and supplier companies have a unique perspective on the companies they deal with in either role. Companies that aren't responsive to customers or treat their suppliers with disdain likely have internal problems that could hurt their growth prospects. Once again, individuals tend to repeat behavior patterns. An executive who has been a micromanager in one situation is likely to be the same in the next situation. Your challenge in this arena may be locating customers or suppliers. Customers are usually quite willing to discuss their opinions of companies serving them, since the customers have little to lose. Suppliers, however, are likely to be more guarded, since they don't want unfavorable statements to somehow get back to their customer, and possibly endanger the relationship. Once again, your network of personal contacts-friends and friends of friends-is your best bet for locating candidates to speak with.