How to Prepare for Due Diligence in California


Due diligence is your opportunity to demonstrate that your company or IPO offering is a good choice. The best way to accomplish this is by offering transparent corporate information that is clear and concise in the minds of your potential investors.

Doing so may increase your chances of success. For due diligence compliance advice, you may want to talk to a due diligence lawyer in California to help you make the best decisions possible for your investors, customers, and company.

Potential investors often have a long list of documentation demands involving certain aspects of your business. These types of documents typically relate to accounting, legal, and business matters. There may be a request for:

  • Board meeting minutes

  • Bylaws articles of incorporation

  • Capital gains and losses

  • Financial statements

  • Top-producing vendor agreements

The main idea is that they are trying to get a ‘read’ on how you operate as well as learn more about the overall health of the business. You can prepare this information in advance since you are sure it is at the top of the request list.

What to do if You Cannot Locate Requested Documents

It is not unreasonable to believe that you are unable to locate or produce a specific document requested by potential investors in anticipation or advance. Some estimates cite that more than 10% of non-digitized company documents are lost by personnel every year.

In short, you are not alone.

Here is the deal: You need to replace it or substitute critical documents within the fullest extent of your power. You may even need to add footnotes that explain the numbers and information more clearly. Failing to do so may jeopardize your chances of investment potential due to the level of competency exhibited.

This outcome may eventually become a deal fatigue or transaction loss situation. A messy corporate house does not instill confidence in investors. You may want to discuss your options with an attorney if you find a document more difficult to recover than others.

Disorganization Can Hurt Your Chances of Finding an Investor

Preparing for the due diligence phase requires you and your team to take a systematic approach to the organization and storage of relevant company documents. It makes sense that a central location of digitized files is likely a better choice than a mix of the two spread across several areas and devices.

Doing so allows you to quickly respond to requests for necessary documentation that may secure financial support faster than those who do not. When your corporate house is in order, it shines in the eyes of your investors.

Consider Discussing Your Deal with a Due Diligence Lawyer in California

At De Cárdenas Law Group, it is our mission to see you succeed in every legal aspect of your business. Let us demonstrate how we can help you stay compliant with our legal services. You can schedule a meeting with one of our due diligence attorneys in San Francisco or South Pasadena, CA by calling (626) 577-6800.

#duediligence #investors

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The De Cardenas Law Group is an advisory group that works with family and privately owned businesses in the food and beverage and consumer packaged goods space.  

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  • (626) 577-6800

  • 625 Fair Oaks Ave., Suite 383, South Pasadena, CA 91030

  • 1 Sansome St, Suite 3500,
    San Francisco, CA 94104

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