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The expertise, time and effort required to complete the evaluation of prospective investments is substantial. The due diligence proceedings would include but not be limited to the following:
* visits to the company and review of facilities and related operating assets
* assessment of management and shareholders
* discussion of corporate objectives, both short-term and long-term
* research on the industry, markets, products, services and/or technology
* analysis of the competitive position of the business
* inquiries about the experience and effectiveness of management personnel
* examination of the past performance and business plan of the company
* analysis of the company’s financial statements, projections, and forecasts
* assessment of the regulatory environment in which the company operates
* obtaining opinions and information about the company and its prospects from consultants, customers, suppliers, bankers, financial analysts, and technical consultants, as may be required;
* analysis of potential return on investment
* review of all agreements to which the company is a party, and
* analysis of the company’s intellectual property rights, if any
Where it is considered advisable, BSA will engage other professionals with particular expertise for assistance and advice with respect to its review of particular investment opportunities.
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As part of the overall investment strategy described above, BSA anticipates that each investment opportunity will be evaluated according to the following criteria:
1. Sector background
* industry overview
* strategy to execute on business plan
* competitive advantages associated with technology, established market position and barriers to entry to assist in growth
* competitiveness of the marketplace
2. Anticipated financial performance
* historical and projected performance, particularly cash-flow and earnings generation
* margin trend
* economies of scale
* working capital, infrastructure and capital requirements
3. Management and other stakeholders
* constitution of the management and shareholder team
* their motivation, cohesiveness and track-record
* their degree of commitment to growth and the business, including financial incentives
* their long-term vision for the company
* their willingness to have active partners in the business
4. The exit opportunities for the investment
* potential likelihood of exiting via the public market
* likelihood of a strategic buy-out
* projected cash resources of the company enabling debt servicing and repayment, along with a share buyback
* potential of a management buy-out; and likelihood that the fund will be able to realize substantial capital appreciation on the investment in the expected time frame |
