Do You Know the People Involved in Generating the Investment Returns?
We’ve been discussing investment due diligence questions. People are almost always what are most important in any investment. Who is in charge of generating the returns? Do you know them? What reason do you have for believing they will be a success?
Whether it’s a small venture or a large public corporation, the people who it will fall upon to produce value for the investor and thus the investment return are extremely important.
If it’s a public company, who is the CEO? The management team? What are his experiences and/or expertise that lead you to believe that the idea will actually come to be a success? Knowing the values of the those involved with running the operation can be extremely important. What do they stand for when times are tough? Do they have a track record that shows you that they will make the right decisions to bring profitable value to the market? A great corporate idea is important, but the greatest idea, operated by the wrong people, will come to naught. It’s important for you to know whether or not you should trust capital to these people.
If you’re looking at investing into a private venture, those who are involved are again, extremely important to the success of the project. If something goes wrong, do you know them? Can you trust them? Do they have expertise to bring to the table to make this venture a success?
Difficulties will pop up from time to time when you are an investor and actually knowing the people who you are investing with can be a tremendous help. If problems arise and you are able to call the person and discuss the situation, you might have insight or expertise that enables you to help bring the project to a successful conclusion. This is a very different circumstance from the public corporation where you don’t know the people and have absolutely no impact on decision making.
So again, knowing the people and feeling confident that those you are working with have the competence, values, character, and focus in line with your own will pay incredible dividends. Not knowing these things could lead to disaster.
This is Part 13 in the series Investment Due Diligence. To use this as a growth tool to better understand your own calling, you might start by reading Part 1, Pt 2, Pt 3, Pt 4, Pt 5, Pt 6, Pt 7, Pt 8, Pt 9, Pt 10 , Pt 11 and Pt 12.
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