By J.P. Dahdah, Founder & CEO of Vantage
In my last post, The Secret to Finding the Best Private Company Investment, we discussed the importance of due diligence in evaluating a private company for investment. But what should you look for when considering a private company for Self-Directed IRA investment?
1. Solid balance sheets. Check the company’s current financial position. Make sure the liquidity and solvency of the company can meet its current and long-term obligations, without compromising its operations.
2. Excellent management with a strong track record. A business plan may look good on paper, but you have to ensure the plans will materialize. Otherwise, you really are gambling with your Self-Directed IRA. However, with a committed management team who actually understands how the company can achieve its goals, you can be confident about your investment.
3. Competitive Advantage. What makes the company different from other players in the industry? The company must have a unique value proposition, high barriers to entry and a potential for market leadership. Competitive advantage may also refer to a company’s pricing and service quality.
4. Strong financials. A company’s prospects for growth must be defined with clarity. While historical performance is indicative of a company’s ability to maintain high revenues, it cannot serve as the sole basis for future performance, especially when specific corporate actions, if restructuring, acquisition or recapitalization, are about to take place.
A company characterized by these four elements does not only present high potential for returns, but also provides ample protection against possible risks and losses in your Self-Directed IRAs.
For more information on how you can discover your IRA investing alternatives, contact our team at (866) 459-4590 or Info@VantageIRAs.com.