Pre-Investment/M&A Due Diligence
Much has been written about the principles of successful venture and equity investing including; VC deal structure, contracts, valuation and market capitalization, business planning and financial management, exits, etc. A great number of investors can and have spoken eloquently of critical investment success factors including; equity structures, financing, investment cycles, market caps, term sheets, portfolio management, ROI, managing risk, etc., all no doubt instrumental and necessary to investment success.
However, little has been written and not much more has been formally discussed regarding the more subtle yet “game changing” elements and factors that influence and impact venture and investor outcomes. Many investors have spent hours and lifetimes lamenting and regretting having excluded, neglected, minimized and omitted due diligence data points and elements that would have or could have reduced their risk and/or optimized their investment returns. Management Resource Associates, Inc.’s due diligence methodologies and practices have been designed to not only uncover the more standard and classical indicators and predictors of investment success, but to additionally provide the ability to access and assess the more subtle variables that substantially and ultimately influence investment outcomes. Pre and post investment appraisal and due diligence efforts comprehensively, objectively and systematically probe, investigate and scrutinize the more subtle yet critical factors that all too often influence investment outcomes including:- Organizational life stages and cycles encompassing and influencing; accountability, systems and infrastructures, conflicts and inconsistencies, delegation, focus of control, motivations of Founders, decision-making roles, etc.
- Organizational life stages and cycles encompassing and influencing; orientation to current realities, commitments and passions, flexibilities, incentive orientations, function to form, sales to profit focus, marketing orientation, etc.
- Organizational life stages and cycles encompassing and influencing; trust elements and dynamics, avoidance of conflict, mission definition, peak performance, team building and teamwork, resource allocation, structure building, etc.
- Entrepreneurial and Founder character, temperament and disposition, readiness for change and adaptability, etc.
- Managerial synergies and compatibilities including; core competencies, scope of experience, styles and orientations, attitudes and values, etc.
- Managerial synergies and compatibilities including; levels of intellectual functioning, critical thinking abilities, cognitive efficiencies, problem-solving and decision-making orientations, planning skills, standards of performance, orientation to change and change management, etc.
- Organization and culture including; organizational focus, tolerance for risk, performance orientation, readiness for change, commitment to vision and mission, levels of dedication, etc.
- Organization and culture including; conceptions of accountability, work ethic, sense of urgency, patterns of influence, patterns of communications, levels of job satisfaction, overall morale, etc.
- Factors and variables that influence and impact performance and productivity including leadership styles, roles and performance expectations, recognition and reward systems, feedback and knowledge transfer systems, bench strength, management of change, advancement opportunities, staffing models, opportunities to learn and grow, employee job satisfaction, etc.
- Managerial and cross functional team synergies including; uniformity of purpose, unity of purpose, cohesion, interdependencies, cooperation, collaboration, etc.
- Barriers and risk corridors including; orientations to investor and board relationships and interactions, readiness and orientation to new professional management, capacities and orientations to change, inclinations toward anticipation and innovation, definitions and parameters of accountability, resistance to continued growth and development, etc.