Welcome to the Due Diligence Handbook

It finally happened. The day you dreamed of has finally arrived. An Investor, with a capital “I”, wants to put money, REAL money, into your company. All you have to do is get through the legal bits (you know the lawyers, always gotta get their share) and provide some documentation and, that’s it. You have moved up to the next league.

That night, you go to sleep mentally writing out the interview you are going to give in five years, after your wildly successful IPO.  You are envisioning the yacht you are going to buy.  It is that real.  In the morning you go to the office. In your inbox is an email from Investor’s counsel.  As part of the potential investment, Investor needs to conduct Due Diligence. In plain English, they need to check you out.  You open the attached document. Eleven pages and 10 sections of…what the %$#@*! is this? Is this supposed to be English?  They can’t be serious!

Eleven pages of legalese. That’s what you are holding in your hands.  The fantasy yacht bubble in your mind pops. You see your IPO dreams vanishing.   You hate lawyers with every fiber of your being. And accountants. They are part of this.  It’s all a big cabal, lawyers and accountants. You hate them all.

Relax.  Seriously, just chill. If you have been working clean and keeping organized, this is no biggie. Yes, it’s a fair amount of work but a lot of that is simple busywork.  You already have everything and just need to zip it up and send.  I’ll be translating the whole 11 page document for you; one section at a time. See for yourself–this is doable. You’ve got this.

(And if you haven’t been working clean? In that case, you are up that proverbial  creek without that proverbial paddle.  Maybe you should start reading as well, see what you need to do to get your company ready for the big time).

Hat tip:  My thanks to Guy Lachmann at Pearl Cohen Zedek Latzer Baratz for providing source materials for this series.

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