Before investing in a Computer Hardware Distributor

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Questions to ask before investing in a Computer Hardware Distributor





80 due diligence questions.


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General Question

  1. If you were to play devilís advocate, what are the negative things about this particular business?
  2. What are the companyís biggest threats in the next 12 months?
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About you

  1. What is your objective with the investment?
  2. Are you prepared to invest in the business again at a later stage?
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Financials

  1. What is the current monthly cash burn?
  2. How much runway (in months) does the business have with the current cash burn?
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Assets and liabilities

  1. Does the company rent any properties?
  2. Does the company own any properties?
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Cashflow

  1. What are the 3 main sources of cash burn?
  2. How many days on an average pass from receiving payment to paying the distributor? (Cash to cash cycle)
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Risk management

  1. What are the payment terms for clients?
  2. How does the company handle its taxes and VAT?
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Competition

  1. Are the competitors thriving or struggling?
  2. Who are the main competitors?
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Clients

  1. How many customers pay late?
  2. Any customers with not paid and outstanding invoices? Which?

Distributors

  1. Identify the 3 main distributors to the company - what if they stop delivering?
  2. What are the payment terms to distributors?
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Legal

  1. Does the company own any IP rights?
  2. Does the company have any disputes with current or former employees?
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Organization

  1. Who are the key employees/persons in the business?
  2. What if the key employees quit?
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Scale, future growth and potential exit

  1. Does the company expect to raise money again? When and how much?
  2. What is the strategy for the coming years?
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