Seven Key Questions for Evaluating a Private Company

A framework for an initial and quick investment analysis, Carofin has identified “Seven Questions” to efficiently guide a prospective private investor to a basic, but more comprehensive understanding of an operating company.   While not exhaustive, addressing these seven questions provides a solid foundation from which to conduct more detailed due diligence.  The Seven Questions are:

  1. What does the company do?
  2. Who are the key managers of the business?
  3. What stage is the business and is the investment being offered appropriate?
  4. Who are the company’s customers?
  5. How is the product or service produced?
  6. How does the company make money?
  7. How will investors be paid back?

These seven key questions are used by Carofin to achieve a basic understanding of a prospective issuer of private debt, venture capital and private equity securities and for then conducting more comprehensive financial analysis, including due diligence.





In the interest of accessibility, here are some terms that any investor should be familiary with.