Fundraising Due Diligence Checklist

Are you planning a major deal or considering the possibility of participating in the fundraising project? Then, conduct due diligence to analyze information about all key aspects of the activity and the state of the counterparty. So, what is included in the fundraising due diligence checklist?

The place of due diligence is the fundraising process

Fundraising is the art of attracting external, both tangible and intangible funds and other resources. Not a single non-profit organization without additional funds will be able to carry out its socially significant projects. For the fundraising strategy to be successful, experts recommend taking several correct and consistent steps, which are the basis of fundraising.

When we talk about investment consulting, we first talk about the procedure for forming an objective view of the investment object. Firstly, this is a due diligence procedure for developing an accurate idea about the investment object, which includes investment risks, an independent assessment, and many other factors. The second is the market value of the appraisal. We understand it as the most probable price at which the given object of assessment can be alienated on the open market in a competitive environment when the parties to the transaction act reasonably, having all the necessary information.

Due diligence of counterparties is a set of services that allows you to conduct an audit of both an individual and a legal entity, during which you can obtain information about the counterparty. Fundraising due diligence aims to determine the legal purity of an object. It includes:

    • legal examination of documents to determine the type and volume of assets, the risks of their loss, as well as the development of recommendations for the protection of assets;
    • analysis of contracts with contractors and creditors, real estate, and trademark documents;
    • assessment of the risks of bringing to responsibility by state bodies, counterparties, and creditors.

What is included in the fundraising due diligence checklist?

The fundraising due diligence procedure consists of five independent stages, for each of which an objective conclusion is eventually made:

      • Operational due diligence

During operational due diligence, the correctness of registration of the issue of shares and other securities, the principal transactions with them, the completeness of payments to shareholders, and verification of their property and non-property rights are also checked. The result of the stage is an independent report containing a description of potential risks and recommendations for their leveling.

      • Financial due diligence

At this stage, the main indicators of the company’s financial condition are identified. Their analysis is carried out to assess the prospects for acquiring a business and its further development. Finally, in the report on the results of the stage, all coefficients and indicators are given, and the appraiser’s conclusion is given.

      • Tax due diligence

The main task is to analyze the company’s entire financial and economic activity over the past three years to determine its real financial condition and identify potential tax risks. Based on the research, a report describing potential tax risks and recommendations for their reduction are drawn.

      • Legal due diligence

It is carried out during the analysis of the company’s assets with a mandatory examination of all title documents separately for each asset. This stage aims to identify the type and volume of assets, determine the risks of their disposal and develop recommendations for protection. 

      • Marketing due diligence

The purpose of the stage is to evaluate the company’s product (goods or services) in terms of competitiveness in the market and to identify the risks of an ineffective marketing policy.