Thorough investment analysis should be preceded by an abbreviated process described in the “Five Elements.” Once this framework is understood, a private investor can determine whether a more in-depth and time-consuming investigation is warranted.

The five elements that influence an investment’s structure include:

1. Purpose – Why is this capital being raised?

2. Issuer – Who is issuing the security?

3. Security – What type of investment is being offered?

4. Repayment – What determines the success of the investment?

5. Risks – What can go wrong?

Each element is interrelated. Reviewing these topics in order enables the investor to gain a much-needed perspective before deciding to proceed.