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Follow on Google News | Due diligence tips for SMEs looking for venture capitalSmall and medium sized businesses are eager to find the funding they need to carry out expansion through mergers and acquisitions. But how do owners of SMEs and start-ups make sure their investors are the real deal?
By: Merrill Datasite Most small business owners are learning that carrying out a thorough due diligence process (http://www.datasite.com/ 1. Check social networks for background on a venture capitalist. These days, there’s a wealth of information out there that can help people to spot potential risks and problems with a prospective investor. Business owners can use sites like LinkedIn to find out which others firms the investor has partnered with. These partners can then be contacted a quizzed about their experience. 2. It’s also a good idea for entrepreneurs to find out if their venture capitalists has experience in their industry. It’s always preferable for an investor to understand the businesses or at least the industries it partners with. Prior investments can give this information away, as can general due diligence question (http://www.datasite.com/ 3. Taking every opportunity to network with other entrepreneurs and small business owners will help most to establish whether accepting the help of a venture capitalist is for them. Talking to those who have accepted investment, as well as those who have not, will enable owners to gain a balanced perspective on the topic. If any of these new contacts can provide references to other firms that accepted venture capital (http://www.datasite.com/ 4. Aggressive terms should sound an alarm in business owners’ ears and a venture capitalist that insists on restrictive or high liquidation preferences should be viewed with caution. It is likely that SMEs that are seeking investment may consider mergers in the future and, in if this were to occur, business owners need to make sure they are not left liable for massive payouts to their venture capitalists. These kinds of aggressive terms are becoming more common in light of the current economic climate, but any terms that could threaten a small companies’ future ability to conduct M&A (http://www.datasite.com/ 5. If an entrepreneur does decide to take the plunge and accept investment from a venture capitalist, they should get busy establishing good relationships with this new partner. Making sure there is a contact at the venture capitalist that knows their business should be a priority for any business owner. Once this ‘chemistry’ About Merrill DataSite Merrill DataSite (http://www.datasite.com/) With its deep roots in transaction and compliance services, Merrill Corporation has a cultural, organization- As the leading provider of VDR solutions, Merrill DataSite has empowered nearly 2 million unique visitors to perform electronic due diligence (http://www.datasite.com/ For more information, please contact Merrill DataSite: Tel: 1-866-399-3770; Email: info@datasite.com; Read the full article here: http://www.datasite.com/ Visit our Knowledge Center here: http://www.datasite.com/ Follow us on Twitter: @merrilldatasite End
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