Doing Due Diligence - A Reminder

[DragonflyProperties]

An article in a recent issue of Canadian Business provided a nice reminder about doing your own due diligence when investing (in anything). The article was about the asset-backed commercial paper (ABCP) debacle. The comment was made by a Calgary oil industry engineer who forced Bay Street to stop ignoring the average folks who collectively and unwittingly dumped hundreds of millions of dollars into the now frozen market for ABCP. At the end of the article was the following summary - But whatever the future holds for Hunter, he has learned a lesson. "Don`t let anyone else perform your due diligence on any business transaction," he says, and if you can`t properly perform it, then "run".

And on another note, Warren Buffet is in Europe searching for companies to invest upwards of 36 billion dollars in. He continues to say that he won`t invest in technology companies because "I don`t understand them."

Keith

 

[joeiannuzzi]

Hi Keith. Great topic to discuss. In REIN, we have proven systems for doing due diligence on a property and even a J-V partner. It never ceases to amaze me how many people spend more time buying a new pair of jeans than they do doing due diligence on a business/investment.

If you do not know how to do due diligence, always ask someone who has no financial interest in the transaction for assistance. One example would be a business coach. I cannot begin to tell you how many people have helped me in past situations.

 

[DonCampbell]

Keith this is one of the very true mantras of a sophisticated investor. They don`t care what the source of info is... as long as it is unbiased. If it even hints at a bias, then it is incredibly important to dig deeper.

We are all responsible for EVERYTHING we create in our lives, both good and bad... knowing that makes us all do that extra 10% that others aren`t willing to do.

Great post Keith.