Why do some companies get showered with financing offers to create success NOW and business acceleration and others end up empty-handed and stuck in quicksand? It’s all about due diligence.
Before you get a loan, an investment, a client, an acquisition offer, or an investment banker to take you public, you’ll need to prove you have a solid business and that you’re READY for business acceleration. This is why we love to hate the due diligence (DD) process: it’s ridiculously time-consuming, and yet it’s required if we want to raise cash. Good DD prep enables a company to fly through the process and extract more cash for their company with less dilution. Here’s how to make the process work for you.
The DD Mind Game
On one side of the table is you, eager to close the deal. On the other side of the table is the funding source, who has at least as many reasons to nix the deal as to ink it. This is why DD is key: your goal is to reduce the fear of loss and increase the greed for gain in the funding source’s heart and mind.
First, be open and cooperative, as the funding source will note your reaction (verbal and body language) to their information requests. Assign one person to be the contact for the DD process, otherwise the operations of your company will be seriously impacted. This person should be detail-oriented, such as someone in finance or operations. Do not assign someone from sales or marketing.
All areas of your business will be scrutinized before a deal is done. Some funding sources will obsess over every item you give, others will focus on the potential deal breakers within each category. The process will generally take 3-12 weeks, depending on the transaction, with the least amount of a time for a loan, and the most for an acquisition. Investments from VCs or angels will land in the middle.
This is just the BASIC info – Due Diligence 101 – if you’re ready for real FUNDING avenues, business acceleration and CEO freedom (plus the 1-2-3 down and dirty info on creating financial freedom), you really need to do more than read my blog – but hey, this is still a good place to start. To your ROCKIN’, no-holds-barred, no excuses allowed, SUCCESS.
Christine Comaford, CEO Freedom Fighter
CEO of Mighty Ventures, Inc.
NY Time Best Selling Author
PS: My BAI weekend is the fastest way to ramp revenue and your company’s growth because it’s so intimate (I only take 20 participants) http://www.mightyventures.com/bai – I still have two spots left, and I would love to have you guys there to learn from me, firsthand, how to create MASSIVE growth and avoid HUGE mistakes.