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Due Diligence Scenarios
Companies that are the targets of an acquisition or investment may wish to prepare themselves for the technology assessment.
Rosewood offers a “reverse” due diligence service, whereby we perform a full technical due diligence assessment of the company. We provide feedback in the form of recommendations for addressing any risks from an investor’s point of view, and we prepare a report and a data room that may be shared with investors.
Simply being aware of a risk is often an indicator to an investor that a target company’s technology team is on the right track. The reverse due diligence exercise prepares the target company to answer difficult questions and involves the technical team in setting up a roadmap for future progress.
A thorough internal DD smooths the way for the investor, and may be accepted by the investor as adequate for their investment purposes. Rosewood will assist our customer by accommodating interviews with the investor, once the external DD starts.
Investing in a startup company presents a number of risks, some of which are hard to quantify. An essential component of any startup is the quality of the technical team and of the architecture on which the team is building the “next big thing”.
Rosewood recognises that the risk of investment is larger in an early stage startup, while at the same time the technical infrastructure is less mature. We offer a structured approach to evaluating early stage startups on behalf of seed funders, angel investors and early stage venture capital investors.
Our early stage due diligence process focuses on evaluating the technical team and the direction in which the architecture is evolving. We point out strengths and weaknesses and potential pitfalls.
Beyond seed and angel funding, companies have a more established team of technologists, with a platform that has matured beyond the minimum viable product that was used to launch the company. At this level of maturity, Rosewood’s due diligence process retains a strong focus on team and process, but we pay additional attention to the state of the software, areas for improvement, and scalability problems.
The preparation phase includes a thorough overview of the company to establish where the company is in its lifecycle, and what the most suitable approach to a due diligence exercise is.
Later Stage Investment
Companies that are subject to corporate financing (albeit as a strategic investment, acquisition target or buy-out) may be in a more mature part of their lifecycle, or may be enjoying strong growth, leading to a dramatic increase in the size of the technical team and the challenges this team faces.
For larger, more mature organisations, the Rosewood due diligence covers the spectrum of technology concerns - scalability, team evaluation, security issues, infrastructure evaluation, evaluation of the platform architecture, and development process and QA process evaluation. We use all the results of the investigation to present a holistic view of the risks and opportunities inherent in the target’s technology platforms.
In certain scenarios, the investor may wish to focus on particular aspects of the target’s platform - for example scalability or security. During the preparation phase we ensure that we understand the areas of concern for the investor, and we pay particular attention to the risks inherent in these areas.
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