DUE DELIGENCE – For initiators

In the process of finding an investor, sooner or later, a situation arises in which the initiator of an investment project receives an interest in financing business ideas from second or third parties, information about which is poorly presented or is not available completely. There are some cases when the Initiator is required to pay in advance for various kinds of expenses: investment insurance, bank expenses and guarantees, investor’s visit to the initiator’s site, etc.
How to preserve the uniqueness of your own idea, its security, finances, and not run into trivial scammers? There is only one answer – checking a potential partner for integrity and business cleanliness through due diligence.
Let’s try to understand the definition of what this process is:
Due diligence financial condition and market position. It is usually carried out before the start of a business purchase, the implementation of a merger (acquisition) transaction, the signing of a contract or cooperation with this company. This method consists of collecting and analyzing information, making a decision and form of its submission regarding the advisability of entering into one or another relationship with counterparties. Due Due Diligence assesses possible risks (for example, financial, legal, etc.). When collecting information, any information is taken into account, regardless of its source. The study of the information received is done by various specialists separately, then a summary analysis is done. The decision is made by Due Diligence experts separately from the customer. The submission form can be developed (with the application of separate intermediate conclusions of specialists, sources of information), or in the form of a brief recommendation on further actions.
Alfa Resonance Capital Ltd offers the initiators of investment projects a thorough examination of a potential investor or financial institution in 2 main forms of work – stationary and field. In this case, the main sources of research of a potential investor will be the following initial information data:
Documentation of a potential investor partner:
  1. Corporate documents (regulations, protocols) – change of control, previous transactions affecting capital.
  2. Financial statements – a detailed study of assets, existing debts, rental payments, pension contributions, arrangements with affiliates and potential liabilities, existing equity.
  3. Technical reports – a study of environmental and other problems that can entail large costs.
  4. Market research / Reports on the company’s products and services.
  5. Key intangible assets: patents, trademarks, trade names and copyrights; licenses.
  6. The main tangible assets: mortgages, title documents for real estate and personal property, identification of real estate and assets.
  7. Contracts: supply and purchase / sale / financing agreements, contracts with employees and consultants, leases, license and franchise agreements, loan agreements, shareholder agreements, sponsorship agreements, labor agreements, management agreements, collateral agreements or other agreements providing other parties the right to acquire company assets; sales and product warranty agreements; takeover agreements; social security plans; collective retirement plans; deferred compensation plan and stock options.
  8. Insurance policies.
Management and employees of the company:
  1. Information about finances and owners.
  2. Court cases.
Various external and third-party sources:
  1. Information about the market and capital. Market research, services and products. Confirmation of information on the capital of the company. Check burden. Verification of the creditor.
Also – the study of patents and trademarks (search for possible violations of rights to products or trade names). Confirmation of the good financial condition of all branches of the corporation, functioning or not. Examination of property titles / title acquisition insurance. Evaluations of the company’s property and its improvements. Any equipment assessments made by or for insurance companies.