Q: Why is due diligence so important?  

A:  When you meet entrepreneurs who have been motivated to start a company to do good in the world, they often have a compelling story, and more often than not, a purpose-driven character and a good dose of charisma. It’s an immediate draw, and our first instinct is to help. But the due diligence reveals the richer, more holistic story, hidden in the financials, the key performance indicators (KPIs), the policies (or lack thereof), the interviews with staff, clients and suppliers. To make a good investment, due diligence is paramount. 

Q: How long does due diligence usually take?  

A: That really depends on the company – how ready they are for investment and how responsive they are to our requests for information. We understand that small growing businesses need to raise capital, but this takes time and energy away from core business activities.  We have designed a phased stage gate due diligence process that stair steps the work companies need to do. Also, almost everyone on the Talanton team has extensive field experience and knows what a challenge it is to conduct the early stages of due diligence sitting in an office halfway around the world. At certain points during the due diligence process, one or more of Talanton’s partners travels to do site visits. We also rely on our trusted strategic partners, accelerators on the ground like Sinapis, to do additional third–party due diligence and verification for us. All that said, it’s hard to give a definitive timeline, but if all cylinders are firing, it could take as short as three months or as long as six or more months. 

Q: How do you connect with client management teams in country?  

A: Alongside the onsite visits that we do, we are consistently in communication with client management teams through email and video calls. How responsive they are with long-distance communication is an important part of our assessment, since the same responsiveness is expected for updates and reports to our own investors if we decide to invest.  We also connect with the companies through our African-based strategic partners, and often will use other individual consultants or industry experts in the country. Having multiple touch points with the company is part of good due diligence and strengthens the network of relationships. 

Q: What are the key pieces of information you look for to assess if they are the right fit?  

A: We conduct deep dives into four major categories when we conduct due diligence: 

1. Impact First – We look at the company’s vision, social mission, KPI’s related to impact and then drill down on how they have executed on those things as well as their forecasts. 

2. Governance and Management – We assess risks associated with the management team, the Board, company policies, culture and administration. 

3. Market and Production – We assess risks associated with market conditions and production capability, and the company’s operational ability to execute the project. 

4. Investability– We look at all financial aspects of the company – historical and projected. 

In addition to these four, there is a fifth piece that we consider as we go through due diligence: the management and technical support that Talanton and our network can provide to the company. Often this doesn’t fully materialize until we get through the entire due diligence, but it’s an important consideration for our team. 

Events are key to building community. See how Apartment Life employs onsite cares teams to help create amazing events. And if you’re wondering how that impacts the bottom line, don’t forget that amazing events lead to renewals!

I was 17 when my dad died. It was sudden and deeply disorienting. Those days and weeks immediately afterward were a dense fog of grief and cleanup. He died without a will or estate plan (mainly because he had nothing to plan).

As the youngest of 5 kids and the only one still living at home without an adult job, I received the largest “inheritance”. After paying all the bills, my dad’s “estate” consisted of $3,000, a small plastic trash can full of change, and a few mementos. I got the entire checking account and the trashcan of change, which I used to feed the laundry machines in my freshman year of college.

A few weeks after his death, his friend came over to deliver my dad’s 7-year sobriety coin. My dad had been an active participant in an AA at his church and the coin was to celebrate his latest milestone. Even as a kid, I knew this coin was worth more than any amount of money I could have inherited. It represents so much more than I can easily capture in a short blog – from pain and lasting damage of his addiction to the good things that came with sobriety. Best of all, his journey to freedom brought him close to His savior. My dad was the first person I remember telling me me about the reality of Jesus. In some way, his 7-year coin tells part of my own faith story.

I think of these experiences often as I talk to families walking through generational wealth transfers. I’ve seen parents with the perfect estate plan, by lawyer’s standards, whose children refuse to speak to each other when the estate is finally settled. I’ve watched the aftermath of a large inheritance destroy a friend. Once a happy mom with a good marriage, the money allowed her a lifestyle of extravagance, parties, and chemical addiction.

I could go on and on with stories, but you get the point.

I really don’t have an answer. Just a plea, of sorts, to parents planning their estates and figuring out what to leave to children. Don’t let lawyers dictate the process; a lawyer’s primary role is to avoid probate and estate taxes. But a lawyer they cannot shepherd the hearts of your children and grandchildren. Please, please, get biblical counsel on the matter. Read “Splitting Heirs” by Ron Blue or “Money, Possessions, and Eternity” by Randy Alcorn.

When my own life is reduced to memories and the stuff I’ve left behind (hopefully several decades from now), what is it that I want my kids to walk away with? More than anything else, I pray they have a deep, abiding faith in Christ and a set of memories that serve them well in their own journeys.

Missouri businessman and founder of Learfield Communications, Clyde Lear, teamed up with NCF to maximize the impact of his business sale and send more to ministry, instead of taxes.

Read more about Clyde’s powerful story.

NCF has an innovative solution that allows you to donate a non-voting interest in your business right before the sale, receive a substantial tax deduction, reduce or eliminate capital gains taxes on the gifted interest, and convert those tax dollars into more giving for your favorite ministries.