Diligence declined to comment. However, sources close to the situation believe a deal could be struck within weeks.

Diligence was founded in 2000 by Nick Day, a former MI5 spy who also served in the Special Boat Service, and ex-CIA agent Mike Baker, who no longer works for the company.

Mr Howard joined on a part-time basis last year. He also sits on Diligence's advisory board beside Judge William Webster, a former director of the CIA and FBI, and Edward Mathias, a managing director of private equity group Carlyle, among others.

Diligence describes itself as an "intelligence gathering and risk management" firm. Like its larger rival Kroll, it has built a reputation advising clients on a range of sensitive issues, such as investigating fraud and money laundering, vetting potential overseas partners and providing security.

The business has grown rapidly since its inception, and now boasts offices around the world, including London, Washington, Moscow and Hong Kong. The new investment, should the Rothschild deal go ahead, will allow it to continue expanding its operations. It is particularly focused on growing its presence in Asia.

However, the group is not without its controversial side. Clients are understood to have included Halliburton, US Vice-President Dick Cheney's former firm, while heavyweight Republican lobbying outfit Barbour Griffith & Rogers has invested in the business in the past.

Diligence settled a dispute with accountancy giant KPMG out of court last year. The legal row centred on claims that Diligence staff had impersonated MI6 officers in order to steal information.