Category: Business Service

Are you familiar with the term ‘due diligence’? If so, perhaps you have heard of due diligence as a service (DaaS). Firms across the country have been providing the service for at least a few years now. It is a service utilized by a certain segment within the business world.

For the record, the concept of due diligence applies strictly to business. The term itself has evolved over the years, to the extent that we use it in a lot of other ways. We discuss attorneys doing their due diligence prior to going to court. We talk about doing one’s due diligence before buying a house. The possibilities are endless.

In a strict business sense though, due diligence is more clearly defined. It is easily understood by looking at the types of entities that would use diligence-as-a-service. Mezy, a Utah company that provides a range of diligence services, says the following four entities are most likely to utilize DaaS:

• 1. Financial Advisors

DaaS is an invaluable resource to financial advisors. As professionals with a fiduciary responsibility to clients, financial advisors have to be incredibly careful about every opportunity they present. Federal and state laws require that all investment opportunities be offered in the best interests of clients rather than advisors.

To that end, financial advisors must practice due diligence regularly. They must look closely at any and all aspects of a particular investment that might impact their clients. Due diligence requires that they look at financials, management teams, past histories, future forecasts, and so forth. All of this is tied up in the due diligence concept.

• 2. Venture Capitalists

Next up are venture capitalists. These are investors who put their money directly into companies rather than investing in stocks and shares. In many cases, venture capitalists are looking to fund startups. They are often joined by angel investors to offer funding for the first two or three rounds.

Due diligence is critical to these types of investors because they really have no safety net to fall back on. If they put money into a loser, they could potentially lose it all. Winning requires investing in winners. It sounds too simple, but it really is. DaaS can be a tremendous help in steering venture capitalists to good opportunities and away from bad ones.

• 3. Growing Companies

Although Mezy doesn’t do a lot with mergers and acquisitions, they say that DaaS is extremely useful to growing companies looking to continue that growth by acquiring or merging with other companies. Interestingly enough, this type of thing can happen either horizontally or vertically.

A horizontal acquisition involves a target company that is within the same industry and a comparable plane. Oftentimes it means acquiring competitors. Vertical integration is usually about acquiring a company for a specific technology or service capable of helping the acquirer move into different markets. In either case, due diligence is a must. Growing companies need to know what they are getting into before they proceed.

• 4. Entrepreneurs and Startups

Finally, …

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When you’re looking for a mortgage, there are plenty of lenders and options to consider out there. 

Sometimes a person will ask you if your preferred money lender is an A or B lender. However, only a few know the difference. Most banks will call themselves A lenders and refer to the rest as B or private lenders.  

The truth is, these terms have nothing to do with the lender’s size or quality. Or even the client’s profile. In this article, we discuss the differences between A lenders and B lenders in Canada. 

A-lenders are traditional lenders such as credit unions and banks. Essentially, the group focuses on customers with a reliable source of income and high credit scores. Since these institutions are regulated by the federal government, approaching them for mortgage calls for a stress test. A-lenders have relatively strict criteria for all mortgage applicants. 

That means that having a low credit score can significantly affect your mortgage interest rates. Most people seeking mortgages have traditionally approached these lenders. 

Even these are the to-go-to mortgage options for most people, obtaining them can be tremendously time-consuming. That is because you need to fill out excessive paperwork, and the interest rates may be quite complicated. 

The process of accessing a mortgage with an A lender can also be daunting since it may take several months before it gets approved. Compared to most financing options, A lenders seem to be the most challenging to obtain. 

On the other hand, B lenders step in when A lenders cannot approve your application. That is why this lending option has gained so much popularity over the past few years. B lenders also tend to be flexible on credit. And rely heavily on the equity in the property in question.

A reason most people prefer B lender mortgages is that they are less stringent with their qualification guidelines. And are more lenient on issues, including debt servicing ratios, credit scores, non-conforming income sources, and different down payment sources. 

When looking for B lenders, you need to go through mortgage broker channels. If they turn you down, private mortgage lenders can come in handy. They allow you to leverage real estate with a home equity loan. However, the option is generally ideal as a short-term mortgage solution. 

Mortgage brokers can assist you in determining the right mortgage for you based on your situation. These professionals go over the financing options available and submit any required documents on your behalf. They may also help in negotiating the mortgage rates and terms. 

With so many mortgage brokers in the market, finding the best one can be overwhelming. For this reason, you need to prepare a set of test questions to ask before you make a final choice. The best one should have your best interest at heart. And show commitment to helping you find the best mortgage option. They should also be professionals in this field, have the relevant licenses and certifications for operations, and help you seek …

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You are a business owner looking for funding. Maybe you are after that first round to fund a fledgling startup. Perhaps this is your second round. Either way, you have spent months preparing for the pitch. You have learned everything there is to know about your business. You’ve prepared an awesome pitch deck. Yet after 60 minutes with the sharks, you walk away with nothing more than advice you are not sure you can use.

Now what? Where do you go in the aftermath of rejection? That depends on what you are willing to do to keep your business moving forward. You could throw up your hands, walk away, and go get a job. Or you could keep fighting for an entrepreneurial idea you truly believe in.

Find Out Why

The first thing to do after a solid rejection is to find out what went wrong. Ask the investors to explain why they chose not to fund you. One distinct possibility is that they were not convinced their due diligence would support what you told them during your pitch. They do not want to put the time and effort into due diligence because they don’t think it will be worth it.

For the record, due diligence is almost a requirement for investors. Whether they do it in-house or contract with a company like Utah-based Mezy, the most successful investors will not spend a dime until they do it. You need to follow that lead. Do your own due diligence to find out why they balked. Leave no stone unturned.

Evaluate the Offered Advice

Any investor worth their salt will give you some sound advice even while rejecting your investment opportunity. Investors do this because, at their core, they want to see businesses succeed. When businesses succeed, so do their investments. So take their advice to heart. If nothing else, accept it as being genuine.

The idea here is to examine the value of the advice offered. In terms of value, look at what you want to accomplish. Maybe three of the five investors offered advice designed to get you to start thinking along more conventional lines. They advised you to change your pitch and rewrite your business model to align with industry standards more closely.

That’s fine if you want to do things the way every other company does. But if not, maybe their advice is motivation for you to seek a different kind of investor. You may evaluate their advice and decide that you would rather work with investors who think more like you. If that’s the case, you thank them for their time and you move on. You start looking for the types of investors whose attitudes more closely mirror your own.

Get Up and Try Again

The most important thing you can do after being rejected by investors is get up and try again. It is a lot like falling off a horse. If you don’t immediately get up and get back on the horse, you …

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