3/9/12

DUE DILIGENCE FEES



I am aware of thousands of investors worldwide who don’t charge fees for their work. I could send your project to all of these investors; we don’t because we send your project to investors most likely to be able to fund your project. You can’t get the most capable investors to work for free. You can get the most capable investors to work very proficiently on your project for a reasonable fee.

It is very important that entrepreneurs understand that they are expected to cover the cost of the funding source’s investigative work and travel to their company during the due diligence process. The only way for investors to determine the value of your project is through the work they do, and the work performed by their accounting, legal and industry experts. All of this work costs investors time and money.

For your information, I have some investors that do not charge for due diligence but they have very strict criteria that deliberately eliminates almost all entrepreneurs because they are very selective in whom they wish to invest with. If you read all the way through this web site, you will read the exact funding programs and the specific criteria for the funding programs that have zero due diligence fees. For all other funding projects, due diligence fees apply, that is the norm in the investment industry. Banks and investment companies are for profit service industries, along with doctors, attorneys, accountants, plumbers, and other service based professionals that charge fees for their time and the services they provide.

Be as honest as possible, any exaggerations or misstatements of fact will be found during due diligence and could jeopardize the funding of your project.

If an entrepreneur cannot afford this due diligence fee, investors will evaluate that the entrepreneur does not have the skills to oversee the investors’ funds. Investors do not provide millions of dollars to companies without a due diligence process beforehand, this is not only common sense it is good business sense.

Another reason investment companies perform due diligence is because some investments become uncollectible accounts receivable when the client is no longer able to repay debt. Many banks and investment companies went out of business because of the volume of clients who could not repay loans. As a result, banks and investment companies are going to perform due diligence to reduce the risk of lending money that is not repaid. It is also why banks and investment companies ask for notarized bank statements, audited financial statements, cash and non-cash collateral, and independent appraisals within the last thirty days for non-cash collateral, all of these are designed to reduce investors' risk so that they do not lend out more money that is not repaid.

Due Diligence includes but is not limited to the following:

Civil, corporate and criminal background checks on all principals and management team

Investigating the financial background of principals (personal and corporate)

Accounting work - Assigning an accounting firm to run a parallel pro forma and to verify the accuracy of accounting data submitted

Travel to site and meeting with the principals if desired by the funding source

Hiring industry consultants to assist in the evaluation of the potential risk of the investment

Investigate liens on assets, property, and loans

Consulting of lawyers for legal matters in the preparation of legal contracts

Fees vary by each individual project, industry, geographic location, and the expected costs of accountants, attorneys, industry consultants, etc. They are not negotiable. When travel is involved, the entrepreneur is expected to cover all costs.

After you’ve provided your project to us, investors will review your data; a conference call will be scheduled through my office with you and the investors. At the end of that call, the investor will decide if their company wishes to proceed. Time frame of the project and due diligence fees is discussed. A non-disclosure confidentiality agreement, letter of engagement and invoice for due diligence fees are all provided electronically. Signed documents will be returned. Payment of the fee is then required.

Send an e-mail to me at ifindfunding@gmail.com