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Risk Assessment
Graveritas Group performed a Business and Technology Due Diligence
The Client, a private equity investment fund, had agreed to a terms sheet for an investment in a foreign-based “Green Technology” start-up company. The products were plastic based packaging products targeted to food and beverage producers.
Graveritas was able to identify and action the following:
- Company was at a purely Research and Development stage, and did not have a product prototype;
- The regulation for North America related to food packaging was not understood by the company;
- Start-up company did not have the required understanding of the North American food and beverage market place;
- A food and beverage packaging professional with retail experience would help determine commercial viability of the product;
- The company was not able to cost the product as the raw materials used were still in question;
Results:
- The start- up company’s forecasts were determined to be overly aggressive and Graveritas was able to determine that the company was much earlier in the start-up phase than the client was lead to believe;
- Rather than making the entire investment up front, Graveritas established milestones and corresponding investment sums as an alternative that was acceptable to the start up and the client;
- Client was able to negotiate a new term sheet to protect its investment;