Obstacles in Direct Investing
Obstacles To Success In Direct Private Equity Investing
You have to pick apart the financials and management's
representations in the due diligence process before
investing in a closely-held business. You can also apply
your own personal experience to the evaluation of companies
in industries or markets different from ones where you
have expertise. But will that be enough? Do you have
enough time to do all the necessary due diligence yourself?
Obstacles that you may not find in a review of an investment
proposal include, among others, a company executive
focused on minimizing his own personal financial risk
more than he's focused on the long-term growth and success
of the company (and your investment). Or you may miss
the fact that the management team has a propensity to
rest on its laurels when the company is performing well.
Worse yet, you could miss a fundamental weakness in
the company's financial controls, operational procedures,
relationships with existing customers, or its ability
to market to new customers.
After you've invested, the company's management may
become side-tracked with a personal or external distraction
such as declining health, marital problems, or a shift
of focus away from growing the company (and your investment).
If you are not available full-time to watch over your
investment, then the value of your investment may deteriorate
without your knowledge.
Balance Ventures adds value to your
investments by digging deeper in due diligence and monitoring
company management and performance constantly during
the life of the investment.