Ask for Company Financials
Never lose sight of the fact that as an investor you are also the banker for the company. As any banker would do, you and your advisor should ask for company financials before funding any investment with Andrew Jang or his company.
“Financials” can take many forms but your advisor will likely know specific data he/she needs in order to objectively evaluate the investment you are contemplating. While this may be in the form of basic corporate accounting data such as balance sheets and Profit & Loss Statements what any banker really wants to know is:
- Is the company earning enough revenue to pay back your investment principal plus return on that investment?
- Where is that revenue coming from—and how reliable is it likely to be over time?
- What sort of liabilities and operating expenses will threaten the return on your investment?
- What are the risks to your investment?
- If you’re buying equity into the company what is the company’s true value? How and who determined that value?
What if the company cannot or does not provide you with financials? What if you are told financials are not available to you because they are considered “proprietary information”?
If you confront this, suggest a third party examine the company financials and report back to you. The third party should be selected by you and your advisor who, again, will prove a great resource in your due diligence.
You can probably imagine how a mortgage bank might react if you were to respond in this manner in your own application for a home mortgage! As a prospective investor you should expect no less than would a banker asking for this information.
Even should the company provide you with their financials, having a professional advisor who knows how and what to look for in a financial analysis will prove to be one of your wisest steps in doing due diligence!