|May 8 , 2006||May 2006|
NEWSLETTER to Investors
Disclosure vs. Sales
Striking the balance?
Or is it a balance?
Personally, I am not prepared to "balance" disclosure with anything. It is critical to remember however, that one does not need to unload every potential negative on a buyer/investor the first time they meet them.
The "Balance" is related to when disclosure is made, not if disclosure is made.
Like most people, I suspect, I have taken many runs at this and only now feel I am beginning to get a system that works. I began with very little disclosure, not because there was nothing to disclose, but because I honestly didn't see the importance/significance of various possibilities. Being my normal optimistic self, I didn't think anything would go wrong or off plan, so why disclose?
Having been proven wrong, and accepting that the seemingly impossible could happen, I moved to the opposite extreme. For a period of time, I "unloaded" every potential pitfall I could conceive at the earliest possible moment. This was done to insure the investor/buyer was fully informed and could make an informed assessment of the risks. Strange how sales and investors dried up!
So what is the secret? It is realistically balancing the possibilities with the potential pitfalls. When selling or presenting to an investor, always stick to the positive initially. With purchasers, the process is a little less complicated since the process of due diligence is somewhat standard and information can be presented as requested.
Investors require special attention. It is important to get to know them reasonably well. Understand their needs and risk tolerance. I begin by structuring investments specifically for an investor or group of investors in such a way that it will not stretch their comfort levels. Then, as we progress into a specific project, we analyze and disclose both sides of every option. By working through different aspects of the investment and discussing them with the investor/s promptly, we are not talking about a lot of potential negatives at one time.
The last step before removing conditions on a property has little to do with the property. It is a time to do a full review of the pros and cons of the deal with the investor/s and determine if adequate comfort exists to move ahead.
Silence doesn't indicate wisdom. Knowing when to remain silent does.
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Invest Alberta (a division of Exces Inc)
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