Progressive organizations are always willing to embrace promising expansion and growth opportunities if they align with their strategic imperatives. Such initiatives are frequently done by investing in other businesses to achieve a faster growth trajectory, gain additional know-how and facilitate entry into new markets/sectors. However, this can turn into a leadership nightmare if suitable measures are not taken to assure and ensure desired outcomes. The following checklist-based questions are being presented to facilitate astute decision-making in the respective context:
1.Who is the Senior Management and what is their professional background?
2.Have you talked to their key customers about the quality/reliability/good points/bad points of their products/services?3.What is the breakeven time frame for your investment and the projected ROI?
4.Who are their bankers/creditors and have they had any problems with them?
5.Who are their major competitors and how do their products/services rank against them?
6.How often do they have to upgrade/maintain their equipment/machines?
7.Can their equipment/machines be hacked? How are they protecting against hackers?
8.Are they significantly susceptible to obsolescence by technology that uses Artificial Intelligence (AI)?
9.What is their vision/mission/strategic objectives/expansion plans for the future and the projected/expected growth rate?
10.Do they have any consumer surveys available to see how effective/user-friendly/delightful are their products/services?
11.Can their equipment/machines still function without online connectivity? If not, what safeguards/redundancies have they undertaken to ensure uninterrupted availability of products/services?
12.Is your investment comprehensively protected from any lawsuits that a client and/or a consumer may instigate in case of any product/service failures?
13.Is there a Board structure in this organization? If so, will you be offered/given a Board position with voting rights as a result of your investment?
14.Have they shared financial statements/records with you? What is the major drain on their resources? What are the key boosters? How good is their health as a ‘going concern’?
15.What kind of freedoms/legal remedies do you have to withdraw your investment if things don’t go well according to your expectations?
16.Do they hold patents for their technology/products/services? If so, how much time is left on their patents before others can use the same technology and/or replicate their products/services?
17.Have there been any HR/labor issues in their organization? If so, what kind and how effectively have they been handled?
18.How good is their relationship with their suppliers/subcontractors? Have there been any issues? Are they overly dependent on any one/key supplier/subcontractor?
19.Are they in total compliance with relevant regulatory guidelines/rules? Is there a monitoring frequency, e.g., monthly/quarterly/yearly visit from the relevant agency/agencies? What are the penalties for noncompliance?
20.Do they have any partnership agreements with any other organizations, e.g., with respect to technology. hardware, systems support, research, etc.? If so, what are the key aspects of those agreements?
21.Has due-diligence been done on them, e.g., by an independent audit firm? If so, what were their latest findings?
The aforementioned questions are designed to provide insights into the risks and rewards associated with investing in a seemingly-lucrative business entity. Consequently, it enables organizational leadership to make a well-calculated judgment for investment. Additionally, it provides the basis for framing a strong business case to placate the concerns of key stakeholders and create a solid ‘buy-in’ that can robustly overcome any future hiccups in materialization. Are you ready…?