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Due Diligence: The Art of 100 Questions (to start with...)


It is one of those stories that the old days come back to haunt you. I started my career as a Banker and am no stranger to due diligence lists. I have been both on the receiving end and in the creative end of those. I have created data rooms to respond, massive excel spreadsheets, and have trolled through data rooms to find more information. I have mention this before, I am always data hungry.

For those paying attention you might ask - but aren't you done with your banking years and off due diligence lists? Well, not really. First, I was never entirely out of due diligence. In fact, I apply due diligence as a modus operandi for challenging the status quo. I just start looking at the numbers, and then ask question #1, which inevitably leads to #2 and is inevitably linked to #3. It does not take a form of an excel spreadsheet and I don't get answers back via data rooms, but the concept is constant - a truly inquisitive nature with the purpose of understand and evaluate a business and seek where it can be changed, improved or let be! I find that the (too?) many sell sides I have been part of showed me there are endless ways of inquiring into a business and each different pieces of data will bring about more. You only have to be interested. Again, another concept I thought permanent. I came to find through the years that true interest and curiosity is one of my core attributes and certainly enhances my challenging skills. I am just naturally interested in finding out why things are done in certain ways, what numbers back up our assumptions, what is the market doing on the other side? I did not know interest and curiosity were not on everyone's list. But moving on!

After spending so many years asking questions and debating the true north of businesses and products, when not divisions and the Firm, I find myself again writing the original due diligence questions.  Earlier in the year I have been given a role to engage further in the Fintech space and get to know the businesses, figure out how we can fit, work or partner. In one of our first projects, it is like someone woke up the monster as I opened an excel file to go through the company's projections. All these questions popped in my mind (and quickly into excel) and unraveled gazed looks from my team. "How would you come up with those like that?". I wish I can say "cause I am that smart". Indeed, the answer is only because I am that curious. I tried to come up with projections for the company myself, and there were too many things I did not know, too many variables I needed to understand, too many risks I needed to get my arms around, too many plans I had no idea about. It is just how my brain works. At that moment in time is like the screen becomes blurred and thirst for knowledge takes place. It probably sounds way nerdier than it really is. Or maybe it is, who knows.

I find that due diligence is a state of mind. And if you really want to embrace a business and help it grow, there is no other way to start other than to ask questions. I had this discussion with a mentee the other day. She has been told multiple times she requires more strategic thought and was wondering how to nurture it. I gave her some tactics. If you wake up tomorrow and you are now the CEO of this business, what do you worry about? And what can inform your worries, what data? Do you have that data? If not why? If you do, do you understand it? Have you considered what it means? Do you look at it regularly? And that is only for worry #1 alone. She is still due to come back to me on her CEO thoughts, but I am certain she will come back with it. Due diligence can be thought, it is a process like any other. Show me a business, and then sit for questions please!

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