Due Diligence Tips: The Operator

The Operator’s Track Record

If you are assessing a private placement memorandum (PPM) offering by a company that has been in business for many years then it will have a track record. So you need to ascertain whether past investors are happy with the company’s performance? And are there any outstanding legal issues? Who are the principals of the company and what are their past successes? If the company is relatively new, researching the key people is of even greater importance.

Much of the above can be achieved by searching the Internet for the names of the company principals, as well as the company name. Then peruse all the various associated links for relevant articles and documents. A Google search can turn up information that may reveal past securities issues, names of unsatisfied clients, fraud allegations, pending court cases, investor blogs (web discussions) and due diligence sites (recorded transcripts between past investors and/or investigators).

Next, call the Securities Commission in the state where the company is based to see if there have been any formal complaints or lawsuits lodged against the company.

Also, read the disclosures of the offering documents i.e. private placement memorandum (PPM). This is where an Operator must disclose anything that might affect your evaluation of the deal, such as past securities issues and any other material information that might influence the decision of a potential investor.

At Stonehenge Capital we have compiled a Watch List of company names and company principals from our extensive due diligence. For various reasons, we are wary of dealing with any of these parties.

Feel free to call Stonehenge Capital Research to find out if the persons or company you may be talking to are on our Watch List.

 

 


Due Diligence Tips: The Operator

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