First, we must examine the following definitions in order to focus the mind:
Absolute: certain; not to be doubted (https://dictionary.cambridge.org/dictionary/english/absolute)
Empirical: based on what is experienced or seen rather than on theory: (https://dictionary.cambridge.org/dictionary/english/empirical)
Reverse reality syndrome: believing ones own lies (Harry Le-Moine)
Main Reasons Why Deals Do Not Get Funded (you can also use the content shown below to start your due diligence list)
- Principals have an adverse credit history.
- Inability to deliver a project overview in under 3 minutes.
- Not having a short overview that is readily available following an initial telephone conversation.
- Obvious lack of experience.
- Poor appearance, manner and words of the principals.
- Principals ramble on.
- Poor advisors.
- Over egging the deal.
- Too many directors, especially those that do not add value.
- Family feuds.
- Anomalies in the psychometric profiles or the principals.
- Knowingly or unknowingly giving false information.
- Weak due diligence.
- Not involving expert opinion.
- Stating facts without proof sources (facts that turn out to be wrong or misleading).
- Failure to comply with reasonable requests for more detailed information.
- Failing to return phone calls in a timely manner.
- No SWOT analysis - weak market research - the inability to understand the competition.
- Plan not detailed enough.
- Plan too complicated.
- No business plan.
- Not knowing the numbers.
- Financial projections are flawed.
- The business plan does not justify what the money is needed for and when (no business model).
- The business plan is dull and uninspiring, written by dull and uninspiring people.
- Failure to describe all processes involved in the business.
- Failure to describe or implement KPIs to measure performance v plan.
- Lack of flexibility by the principals/unwillingness to restructure the deal.
- Valuations beyond comprehension.
- Where applicable no exit strategy.
There are almost always solutions to complex problems
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