One of the necessary evils in putting together a private memorandum or other offering document is putting in risk factors.

So, what should be put in?  Here are a few of my thoughts.  Of course, you need to check with your investment banker, broker, attorney, CPA or other advisor working with you on their transaction.

1.  Government policy.  How could government policy affect your business?  It could be through tax.  It could be through regulations directly affecting your industries or it could be through general regulation that impacts your customers.

2.  Economic conditions.  Economic conditions might have an impact on your business whether it’s affecting your customer’s ability to buy or your access to key supplies.

3.  Management.  In order to execute your plan, you’re depending upon your management team to make it work and there’s no guaranty that they can.

4.  Liquidity.  Your plan might call for an exit at some point in time, such as a sale to a strategic buyer or to a financial investor.  Capital markets might not be liquid at the time that you want to sell.

5.  Technology.  Is your business subject to some technology risk?  Could technology change that it impact the way that you do business?

6.  Product development.  You may be depending upon new products or new services as a key part of your plan.  There could be risk that it could take longer, be more expensive or you may not be able to develop the item at all.

7.  Recruiting.  You may require additional talent in later years to make your plan work.  You might not be able to recruit the talent that you need.

8.  Legal.  You may have patents or you may have patents in progress.  There’s no guarantee that you’ll get awarded the patents or it could be that somebody might infringe on your patent and you need to divert resources towards this area.

9.  Competition.  You may be up against competitors that are larger and have greater financial and human resources.

10.  Customers.  You may depend upon new customers or be reliant on a few key customers in order to make your work and keep you on track.

Make sure you cover as many of these general risk factors plus any others that might be specific to your business in order to cover your bases and protect yourself in the memorandum or offering document.