VALHALLA PARTNERS DUE DILIGENCE Harvard Case Solution & Analysis


Two Model Comparison

Valhalla has just introduced a new due diligence process that could facilitate thorough examination of an offered venture investment. While, previous due diligence process carries a step by step strategic valuation. The model was designed to minimize the pre-errors in money valuation process, in order to avoid the later scams.(See appendix 3 for detailed comparison)

Valhalla Way

The Valhalla’s way of due diligence carries a thorough investigation of the company’s affairs. Valhalla’s partners take it as an opportunity to develop best practices for scrutinizing the venture capital investment proposals. The due diligence process carries some strategic elements, which include:analysis of the company’s strengths, prevailing the competition, market conditions, market size, close working with the management, thorough investigation and focusing on information technology.


The first due diligence process helps the Valhalla’s partners to spend more time on one specific deal for examining its pros and cons. It also helps to minimize its associated risks. The model facilitatesa thorough investigation by performing complete due diligence process. This process helps to capture better, with better terms and conditions. Additionally, it facilitates close working with the company’s management by providing a 100-day operational plan. The investment memo facilitates an insight about the company’s management and its profitability to make a final investment decision.


The due diligence process is verydifficult and carries a lengthy thorough investigation of the company’s affairs.After a complete thorough investigation, if the company’s affairs are not considered as good for a VC investment then Valhallamanagement’s efforts will go to vein and they will be left empty handed with no returns. Furthermore, it is the toughest and lengthy procedure to execute.

The Other Valhalla Way

The new due diligence process has been introduced to gain a true sight about the profitability of the proposed venture. The case exhibit 2 clearly describes the full step by step process. The new process is different to some extent, because primarily it works on present term sheet and evaluates the company’s strength and availableopportunitiesby providingthem with a 100-day plan that could include a changein management or strengthening the existing product line. Along with this, it saves time in first step.


The new diligence process is somewhat different from the previous one, because it facilitatesa thorough investigation at first step, and the Valhalla’s management is able to make the decision at the first step without consuming too much time on one deal. The due diligence process includes the term sheet negotiation early to avoid any delays and time consumption.Additionally, existing entrepreneurs are having bad experiences in ventures funds market, because there aren’t any best practices introduced yet. Furthermore, it helps to capture the beneficial deals in less time after an intense scrutiny.


The new due diligence process is too tough and carries a thorough investigation and research work. The entrepreneurs could not be willing to facilitate a thorough investigation and allow them to have an intense scrutiny. They would rather prefer a low-intense investigation and thoroughly put process for an investment. Along with this, changes in operational functions might not be encouraged. There is also a threat for Valhalla because if the Valhalla’s partners spend their timein due diligence of one specific deal, and the entrepreneurs prefer the higher money valuation deal over it, then it would be a huge loss.


Telco Exchange is a software developing company, which develops managing software for telecommunication companies in order to manage their data networks. Art Mark, the founder as well as the general partner of Valhalla, was looking forward to availa best investment option in Telco Exchange, in 2003. A detailed qualitative and quantitative analysis has been performed in order to determine the available investment options. It is recommended that Mark should vote “Yes” for this potential investment, because has the potential to yield high returns in future. Telco  already has an established market as well as the existing long-term customers. Its technology is comprehensive and effective as compared to its competitors’. Currently Telco is spending more on its marketing and sales campaign in order to sustain its first mover advantage......................


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