Due Diligence for Plastic Materials
The customer wanted some due diligence for plastic materials in preparation for an investment. They said the technology part was solid and there was no need for me to even look at that. The only remaining question was whether some new technlogy might appear and pose a threat. It seemed as though the decision to invest was already made.
Despite the customer assertion that the technology was unquestionable, it seemed prudent to double check anyway, as well as checking for technologies that might compete. Due diligence for plastic materials involves extensive review of published articles and the patent literature.
It was quickly apparent that the investment target company only had patents that were invalid due to prior art and patents that were legally valid, but irrelevant. I warned the investor who then asked for a second opinion from a patent lawyer. The patent lawyer reinforced the same message. The customer was then able to make an informed investment decision.
Phantom Plastics has been performing due diligence for many years. Less than 25% of the technologies investigated to date have been “real”. The rest have relied on invalid patents or ideas that were not commercially viable. Prudent companies come to Phantom and are thereby able to save millions of dollars. Get expert advice to save money and save face!
Other Due Diligence Work
I was first approached to do due diligence work when I was Global Product Development Manager at BASF. My reputation for broad international industrial experience, combined with creativity and business acumen led BASF Venture Capital to ask me for advice. They were already able to evaluate the financial aspects of their target companies but wanted technical input from an expert. I enjoyed helping them on several projects when I was in my 30s. Little did I know then that I would be able to do more such work in the decades after I left BASF HQ.
On another occasion, a company founder contacted me to look at his company. His business partner was the technical advisor and the founder thought it prudent to have an external view on their business before investing more money on expanding their work. He sent me the data to look at and it was quickly apparent that he had been scammed. I wrote a report detailing why the technology could never work and why the proposed plan made no business sense. At first the founder did not want to believe that he had been misled by his friend, but in the end the evidence I presented was conclusive. The founder was able to save a substantial sum by terminating the relationship and closing down the business.
Overall, I would say that perhaps one out of 4-5 cases that cross my desk end up being valuable and the rest are not good investments. What astonishes me is the number of times companies invest many millions without conducting any due diligence and only afterward come to Phantom to check the “due dliligence” box only to find that the millions were wasted. A small investment up front can save a huge amount of wasted time and money.
You may wonder why some people can quickly see through such scams and are able to differentiate between good and bad ideas. It is not well-known, but that topic has been studied and it was proven that the ability is very rare. Less than 5% of potential advisors have the right personality traits and technical ability to generate a substantial and positive ROI. The other 95% of advisors merely break even. You can read more about that in my book Innovation Abyss, available free of charge here.