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I do diligence for a living. It's just not economical to do a full diligence on every investment when you're investment thesis is a portfolio approach.
by mbesto 11y ago
I do diligence for a living. It's just not economical to do a full diligence on every investment when you're investment thesis is a portfolio approach.
- aclements18 11y agoAgreed. Also there are typically legal repercussions for misrepresenting your business that are outlined in deal terms.
- mbesto 11y agoThose are usually covered under "reps and warranties". From what I understand, even if you do "lie" (no one really lies, they just bend the truth...if you do legitimately lie, it's fraud and it's a big deal) there's basically insurance against it (formerly called "representations and warranties"). No VC I know of ever purchases it, but PE do from time to time.
- azinman2 11y agoExactly. If things go south, legal can uncover and if lies were presented then things can turn criminal as theranos now knows.
- jacquesm 11y agoBut that will not recover your investment.
- azinman2 11y agoIt can depending on how much capital or assets are still around. Jail is also a pretty decent incentive to make people avoid overtly lying. Unfortunately its disproportional used on the poor and minorities instead of on professionals.
- gist 11y agoWhat is the cost for something like that? Any way you can give an idea w/o giving away specifics you don't want to disclose?
- mbesto 11y agoTypically there is technology, legal, and financial diligence. Each costing anywhere between $30-100k each.
- wwwdonohue 11y agoWow. How?