3 ms·

If I had to answer a hundred questions before, I wouldn't have done anything in my fscking life. Actually most of the valuable things I've done, I did because I

by narag 4y ago

If I had to answer a hundred questions before, I wouldn't have done anything in my fscking life. Actually most of the valuable things I've done, I did because I didn't think twice. Jokes aside... or maybe no jokes, but alas, this seems an interesting way of assessing any company, even from the inside. Is this for real? Is it too much? Any blind spots? And the better question: what do you think the list would be for the ten questions?

pdpi 4y ago
> And the better question: what do you think the list would be for the ten questions? That list would be the section headings. The individual questions in each section are just drilling down on the details.
buro9 4y ago
> Is this for real? Is it too much? Any blind spots? It's real enough, I've been involved in a few M&A and I'd say that there is always a reason why we've done it and that reason varies but focuses on a section of questions at a time. Not all of these are always important. Sometimes you're acquiring the IP, or the customers, or the skilled people, or the exec team. Know what you're trying to acquire and why, as which questions matter to you will vary.
cjohnson318 4y ago
I think the big thing is: what do you do with the answers? If you assume that all the answers are accurate (lol) then you still have make decisions that will affect yourself and others.
- silvestrov 4y ago
  It is not the answers that are the output. It is making sure you have thought about all the aspects. Like homework in school: nobody publishes your essays, they only want you to be able to write essays.
pas 4y ago
The one question list is "what's the biggest risk of your business". This sounds innocent (and definitely under-specified), but it requires known all the big risks and picking the most important one, thinking about timelines, micro- and macro trends, etc. And then of course the answer itself is kind of irrelevant as long as you get the feeling that it gives you information, it's honest, it's not trying to cover up something, etc. The most important part(s) of doing due diligence is that it has to be done and diligently by someone you trust. Outsourcing it to the subject of the whole process, and reducing it to checklists makes it 10/10 easy to game. It has to be done to the depth, detail, understanding necessary to have confidence. That said checklists are very important to establish the possible areas for drilling down. But since time is always a premium it doesn't make sense to do everything just because it's on the list. (Hence your question of getting a shorter list.) But that list has to be tailored to the situation - as other comments noted. And, obviously, this is why many people try to invest in things they know, and/or focus on areas they know. (And then fail if they ignore the tough questions that stresses them out, or forgot to diversify, or forgot to do reference class estimation and then class appropriate risk weighting. In other words the planning fallacy.)
eitally 4y ago
Yes, it's real, and yes, these are the kinds of things many investors, and most acquirers, will be thinking about. The ten question subset would consist of things like: are business fundamentals sound, and is there a growth plan? is the existing leadership of quality to effect a step change over the next few years leading to exit, or will we need to bring in professional management? is the tech sound, secure and scalable (this is often least important)? is there regulatory exposure, and if so, how has that been addressed?

by narag 4y ago

pdpi 4y ago

> And the better question: what do you think the list would be for the ten questions? That list would be the section headings. The individual questions in each section are just drilling down on the details.

buro9 4y ago

> Is this for real? Is it too much? Any blind spots? It's real enough, I've been involved in a few M&A and I'd say that there is always a reason why we've done it and that reason varies but focuses on a section of questions at a time. Not all of these are always important. Sometimes you're acquiring the IP, or the customers, or the skilled people, or the exec team. Know what you're trying to acquire and why, as which questions matter to you will vary.

cjohnson318 4y ago

I think the big thing is: what do you do with the answers? If you assume that all the answers are accurate (lol) then you still have make decisions that will affect yourself and others.

silvestrov 4y ago
It is not the answers that are the output. It is making sure you have thought about all the aspects. Like homework in school: nobody publishes your essays, they only want you to be able to write essays.

pas 4y ago

The one question list is "what's the biggest risk of your business". This sounds innocent (and definitely under-specified), but it requires known all the big risks and picking the most important one, thinking about timelines, micro- and macro trends, etc. And then of course the answer itself is kind of irrelevant as long as you get the feeling that it gives you information, it's honest, it's not trying to cover up something, etc. The most important part(s) of doing due diligence is that it has to be done and diligently by someone you trust. Outsourcing it to the subject of the whole process, and reducing it to checklists makes it 10/10 easy to game. It has to be done to the depth, detail, understanding necessary to have confidence. That said checklists are very important to establish the possible areas for drilling down. But since time is always a premium it doesn't make sense to do everything just because it's on the list. (Hence your question of getting a shorter list.) But that list has to be tailored to the situation - as other comments noted. And, obviously, this is why many people try to invest in things they know, and/or focus on areas they know. (And then fail if they ignore the tough questions that stresses them out, or forgot to diversify, or forgot to do reference class estimation and then class appropriate risk weighting. In other words the planning fallacy.)

eitally 4y ago

Yes, it's real, and yes, these are the kinds of things many investors, and most acquirers, will be thinking about. The ten question subset would consist of things like: are business fundamentals sound, and is there a growth plan? is the existing leadership of quality to effect a step change over the next few years leading to exit, or will we need to bring in professional management? is the tech sound, secure and scalable (this is often least important)? is there regulatory exposure, and if so, how has that been addressed?