Obstacles in Direct Investing

Obstacles To Success In Direct Private Equity Investing

You have to pick apart the financials and management's representations in the due diligence process before investing in a closely-held business. You can also apply your own personal experience to the evaluation of companies in industries or markets different from ones where you have expertise. But will that be enough? Do you have enough time to do all the necessary due diligence yourself?

Obstacles that you may not find in a review of an investment proposal include, among others, a company executive focused on minimizing his own personal financial risk more than he's focused on the long-term growth and success of the company (and your investment). Or you may miss the fact that the management team has a propensity to rest on its laurels when the company is performing well. Worse yet, you could miss a fundamental weakness in the company's financial controls, operational procedures, relationships with existing customers, or its ability to market to new customers.

After you've invested, the company's management may become side-tracked with a personal or external distraction such as declining health, marital problems, or a shift of focus away from growing the company (and your investment). If you are not available full-time to watch over your investment, then the value of your investment may deteriorate without your knowledge.

Balance Ventures adds value to your investments by digging deeper in due diligence and monitoring company management and performance constantly during the life of the investment.