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Due diligence

About: Due diligence is a research topic. Over the lifetime, 1873 publications have been published within this topic receiving 17235 citations.


Papers
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Journal ArticleDOI
TL;DR: In this paper, the authors provide a preliminary exploration of the underlying economics of nonequity crowdfunding and highlight the extent to which economic theory, in particular transaction costs, reputation, and market design, can explain the rise of crowdfunding and offer a framework for speculating on how eq...
Abstract: Executive SummaryIt is not surprising that the financing of early-stage creative projects and ventures is typically geographically localized since these types of funding decisions are usually predicated on personal relationships and due diligence requiring face-to-face interactions in response to high levels of risk, uncertainty, and information asymmetry. So, to economists, the recent rise of crowdfunding—raising capital from many people through an online platform—which offers little opportunity for careful due diligence and involves not only friends and family but also many strangers from near and far, is initially startling. On the eve of launching equity-based crowdfunding, a new market for early-stage finance in the United States, we provide a preliminary exploration of its underlying economics. We highlight the extent to which economic theory, in particular transaction costs, reputation, and market design, can explain the rise of nonequity crowdfunding and offer a framework for speculating on how eq...

863 citations

Journal ArticleDOI
TL;DR: A review of the existing literature on venture capital and private equity can be found in this article, where the authors emphasise the importance of examining venture capital in the light of recent developments in corporate finance and its distinctiveness from other forms of finance.
Abstract: This paper reviews the existing literature on venture capital and private equity. The paper emphasises the importance of examining venture capital in the light of recent developments in corporate finance and its distinctiveness from other forms of finance. In order to understand current developments, the paper adopts a framework which combines industry/market and firm levels of analysis. Existing literature is reviewed using this framework. Industry level issues relate to rivalry between firms, the power of suppliers and customers, and the threats from new entrants and substitutes. Firm level issues concern deal generation, initial and second screening, valuation and due diligence, deal approval and structuring, post-contractual monitoring, investment realisation, and entrepreneurs’ exit and recontracting with venture capitalists. This is followed by a review of the evidence on the performance of venture capital firms. The paper suggests potentially fruitful areas for further research including the extension of analysis to cover all stages of venture capital investment, examination of the inter-linkages between industry and firm level issues and between stages in the venture capital process, as well as further analysis of deal structuring issues and investment realisation and recontracting.

579 citations

Journal ArticleDOI
TL;DR: In this article, the authors decompose information in the initial public offering prospectus into its standard and informative components, and suggest that premarket due diligence and disclosure by underwriters and issuers can serve as a substitute for costly bookbuilding.
Abstract: Using word content analysis, we decompose information in the initial public offering prospectus into its standard and informative components. Greater informative content, as a proxy for premarket due diligence, results in more accurate offer prices and less underpricing, because it decreases the issuing firm's reliance on bookbuilding to price the issue. The opposite is true for standard content. Greater content from high reputation underwriters and issuing firm managers, through Management's Discussion and Analysis, contribute to the informativeness of the prospectus. Our results suggest that premarket due diligence and disclosure by underwriters and issuers can serve as a substitute for costly bookbuilding. The Author 2010. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oxfordjournals.org., Oxford University Press.

299 citations

Book
01 Jan 2000
TL;DR: In this paper, the two main sources of fund raising for start-up firms, Business Angels and Venture Capitalists, are discussed and discussed in detail, as well as the challenges to securing outside finance.
Abstract: FINANCING OPTIONS FOR START--UP FIRMS. Funding Entrepreneurial Firms. Bootstrapping Internally and the Challenges to Securing Outside Finance. Types of Outside Investors Willing to Finance Growing Firms. THE TWO MAIN SOURCES OF FUNDING: BUSINESS ANGELS AND VENTURE CAPITALISTS. The Value of Business Angels and Venture Capitalists. Harnessing the Power of Business Angels and Venture Capitalist. Understanding the Investors' Structural and Personal Differences. BUSINESS ANGEL AND VENTURE CAPITALIST DIFFERENCES THROUGHOUT THE INVESTMENT PROCESS. Investors' Motivations and Investment Criteria. Screening the Deal and Conducting Due Diligence. Negotiating and Forming the Legal Contract. Monitoring the Investment. Exiting the Investment and Realizing Returns. ATTRACTING BUSINESS ANGEL FUNDS TO YOUR START--UP FIRM. Valuing Your Firm. Negotiating the Funding Agreement. BECOMING A SUCCESSFUL BUSINESS ANGEL INVESTOR. Steps in Effectively Making Your First Investment in an Entrepreneurial Firm. THE FUTURE OF THE BUSINESS ANGEL MARKET. The Business Angel Market in the New Millennium. PUTTING THE WHEELS INTO MOTION. Appenxix 1: A Detailed List of More than Seventy Matching Services in the United States. Appendix 2: Further Helpful Resourses. Appendix 3: Writing a Winning Business Plan. Glossary. Bibliography. Name Index. Subject Index.

223 citations

Journal ArticleDOI
TL;DR: In this paper, the authors report the findings of a large-scale exploratory survey into whether such cultural differences are reflected in different perceptions of the value of due diligence and the use of professional advisors in the pre-acquisition phase.

222 citations


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Performance
Metrics
No. of papers in the topic in previous years
YearPapers
2023186
2022365
2021101
2020127
2019117
2018113