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I do due diligence for a living. > Interesting, I wonder how this is structured - surely there are items that can come up during due diligence that are deal-br
by mbesto 6y ago
I do due diligence for a living.
> Interesting, I wonder how this is structured - surely there are items that can come up during due diligence that are deal-breakers for Xenon, and surely due-diligence is performed before the contract is closed?
The company was inherently transparent with everything. A big part of DD is QoE and there wasn't much to audit there. This was a deal term that reduced any walkaway risk.
> I have no idea how they managed to get the investors to walk with nothing, when the founders walked away with so much.
Deal flow and it's not worth their time. Be nice to successfully exited founders and they'll speak your praises for eternity. General Catalyst wants $1B exits. If the founder leads to dealflow that brings that in, the $800k will be an easy ROI.
- dman7 6y agoRe General Catalyst: precisely what you said and the brand building they just did. Just ctrl+f in this article to see people's reaction to General Catalyst. This will indirectly help them with even more dealflow.
- nraynaud 6y agoCan you re-use the due-diligence of the previous failed acquisition?
- edanm 6y agoNot a lawyer or an expert, but I did go through due-diligence once. One of the hard parts of the process, from the point of view of the company, is gathering all required documents/materials. I'm guessing a bunch of that work can be "reused", assuming they kept all the documents organized, which they would've for due-dilligence.
- mbesto 6y agoThis situation has come up before. The answer is that it depends. Let's say I do a diligence on behalf of PE Firm A (and the deal falls through) and PE Firm B wants to use that diligence because they're looking to buy the company now. Legally/contractually I cannot let that PE Firm B see the diligence report I created, however I have seen situations where PE Firm B would purchase the report from PE Firm A, or the target would purchase it and give it to PE Firm B.
- switch11 6y agoyeah, this exactly Now if (theoretically) some founder reading this thread ever has to choose between General Catalyst and another VC, they will ALMOST ALWAYS choose General Catalyst Over time it will lead to General Catalyst finding a non zero number of 10X or 100X companies because of that