Here's how to use the POEM framework for due diligence on a start-up for investment

1. DUE DILIGENCE
USING
THE POEM® FRAMEWORK
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Wednesday, 13 November 13
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2. The POEM® Framework
PROPOSITION
ORGANISATION
ECONOMICS
MILESTONES
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3. Due Diligence Definition & Purpose
What we want to Know
Where we get the information from
“Due diligence” is a systematic collection & analysis of relevant business information
to form an opinion.
 An investigation of the business, its vision, current status, practices, processes and
policies.
 An examination aimed at giving information for an investment decision using the
principles of shareholder value analysis for evaluation.
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4. Information Required
PROPOSITION
ORGANISATION
ECONOMICS
MILESTONES
• Market
analysis
• Customer
analysis
• Sales
analysis
• Competition
• Pricing/
Profit margin
• Regulation
• Supplier
• Organisation
Chart
• JD, R&R
• Processes
-Sales
-Marketing
-Procurement
-Logistics
-Customer
-Staff
• Technology
usage (Users,
Front & Back
end)
• Current &
Historical
Performance
• Projections
(3-5 years)
• Balance
Sheet
• Cash flow
• Profit &
Loss
• Future
strategy
• Business
model
• Customer
base
• Operation
growth
• Stage
Funding
expectations
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Wednesday, 13 November 13
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5. What we should know after Due Diligence
PROPOSITION
(MARKET
STRENGTH)
ORGANISATION
(MANAGEMENT
DEPTH)
Product/Service Line
Competitive advantage
Growth market
Entrepreneurial Vision
Track record of success
Management depth
ECONOMICS
(FINANCIAL
RETURNS)
Satisfactory Revenue Strengths
Credible future profitability
Acceptable Cash needs
MILESTONES
(EXIT POTENTIAL)
Good exit routes
Feasible –follow on investment
Satisfactory exit value
Techno Vision Communications © 2013
Wednesday, 13 November 13
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