

Due Diligence for a startup - what's involved? - punnned

Hi HN! We've received an offer to buy us out :)<p>Just wanted to know what's usually involved in due diligence for a 1 year old web start up. How do we prepare for it etc.<p>Cheers
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flignats
DD - going to the trenches.

Well, you guys are not the ones that are responsible for doing the due
diligence if you are getting bought out.

But, if you want to know some of details needed then I would have all of this
information ready;

Financials - past, present, future projections Detailed company information -
revenue drivers, strategy, marketing strategy, how are you getting customers
(paid / not paid ), how much revenue per customer, lifetime revenue, lifetime
of a customer Revenue driver margins, future revenue drivers? Competitor
analysis - what keeps you ahead/behind Growth areas for your industry/business
All industry info - qualitative and quantitative Porters 5 forces would help
with getting to know a startup Management team background Advisor background
Current stock ownership, options, ect Laws surrounding your product - what is
the legal landscape, any pitfalls or shifts that will negatively/pos impact
your biz? Economics of the biz - costs, expenses, variable costs, ect
Operating plans Critical risks list of assumptions

Thats a bunch off of the top of my head - some of those categories hold a
bunch of topics like 'fin statements' make sure you have balance sheet, cash
flow, income statement, valuation model, ect.

Hope that helps, there is more..

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sagacity
For starters:

1) Who is the offer from? What are their credentials? Are they a (well)known
/trustworthy entity, with some sort of track record?

2) If not, it could be a 'ploy' from a competitor at worst, or a frivolous
offer.

3) In any case, consult a (competent) lawyer with relevant experience before
disclosing any proprietary information (that could not be otherwise available)
to them.

-HTH

