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;