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Due Diligence
It is better for the Company/Issuer to go through this process one time, than repetitively with every prospective investor.
Sophisticated investors understand the time dedicated to conducting good due diligence has a direct correlation with higher returns on investments. A study by Wiltbank and Boeker found that when at least 20 hours of due diligence is performed, the likelihood of success increases by five times.[2]
Our pre-vetted opportunities help speed your diligence process, and our Deal Structures, Principal Protection & Adjustable Risk & Return features, and Diversification strategies help take the risk out of investing.
Phase I
Our typical initial screen involves a detailed look at the founding team and “C” level management, the company’s product or service, and the industry in which the company operates. We review their business executive summary, a financial pro forma, use of funds, website review and Internet search on their business and its principals. This criteria provides a solid foundation for the initial screening process and can help bring to light any red flags early in the review process.
Phase II
For companies that move beyond our first filter, Phase II involves a deeper evaluation of the business, business model, and the specific market the company is serving. A telephone conversation is conducted with the founders and “C” level management to gain a better understanding of the company and the people who manage it.
Phase III
For companies that move beyond our second filter, Phase III involves a deeper review into the viability of the business and its potential appeal to investors. We request the following full documentation for review:
> Full Business Plan
> Five-Year Pro forma P&L, Balance Sheet & Cash Flow
> Historical Income Statement, Balance Sheet (current within 30-days and from prior two years
> 2-years Business Income Tax Returns
> Use of Funds
> Copy of Incorporation in good standing, By Laws & Business Licenses
> Feasibility Study and/or Strategic Plan, and/or Appraisal (if completed & available)
> Designs, Plans, Studies Appraisals, Supporting Docs (if completed & available)
A through review of all information is conducted to determine a company’s economic viability and revenue-generating capacity. Questions are formed from the review and a second telephone conversation is conducted to discuss our questions. If feasible, a visit to the company and face to face meeting is planned.
Phase III of the due diligence process sets out to quantify the potential of the business as a whole and how attractive it may be for an investment decision. The Client/Issuer is also now prepared with most of the documents which an interested Investor may want to review it their own diligence prior to investment.
