Investment Target Verification: Trace the Assets, IP and Contracts

Investment target verification establishes which legal entity receives funding and how it connects to the assets, technology, contracts and operations presented to investors. A pitch deck may describe an entire group, while the proposed investment concerns one company within it.

The review should trace those relationships and identify the evidence connecting the investment recipient to the business on which the investment depends.

Key Takeaways

• Identify the investment recipient separately from the operating business.
• Establish which entities own assets, license technology and sign customer contracts.
• Attribute revenue claims and payment flows to the relevant companies.
• Document unresolved dependencies and the evidence needed to clarify them.

Map the Entities Behind the Opportunity

Start with the proposed investment recipient. Then identify the entities performing each relevant role:

• operating the business and employing the team;
• owning or licensing the core technology and assets;
• signing customer and supplier contracts;
• issuing invoices and receiving payments.

Several roles may sit within one company. Where they are distributed, examine the documents and relationships connecting them.

Use legal names and registration identifiers throughout the review. Trading names, shared branding and group presentations can obscure which entity performs a particular function.

Verify Each Material Connection

Investment Recipient and Operating Company

Confirm the entity receiving funds and the rights the investor will acquire. Compare the proposed structure with available ownership records, corporate documents and relevant intercompany agreements.

Establish how the investment recipient connects to the operating business. Record questions about governance, funding arrangements and access to operating cash for the transaction’s advisers.

Asset Owner and Technology User

Identify which entity owns the assets or grants permission to use them. Examine the relevant assignments, licences and ownership records where available.

For technology, distinguish ownership from licensed use. Ask legal advisers to assess the rights covered, their duration and conditions that could affect continued use after investment.

Contracting Entity and Payment Recipient

Compare customer agreements, invoices and payment instructions. Establish which company has the customer relationship and which receives the associated funds.

A group-level revenue figure needs attribution. Ask which entities generated the reported revenue and how that figure relates to the company receiving investment.

Operating Team and External Dependencies

Identify the entities employing key personnel, holding relevant permissions and engaging subcontractors.

Where execution depends on another business, document that relationship. Determine which evidence supports continued access to the team, facilities or services required by the investment plan.

Example: Funding a Holding Company

Consider a hypothetical startup raising capital through a holding company. An operating subsidiary signs customer contracts, while a separate founder-owned company licenses the software.

The review should establish:

• the relationship between the holding company and operating subsidiary;
• the software licence and the rights it grants;
• the entities generating revenue and receiving customer payments;
• the agreements governing relevant transfers within the group.

The structure may have a clear commercial purpose. Investors need supporting documents showing how the entity receiving their capital connects to the business presented in the pitch.

Record the Consequence of Each Unresolved Link

For every material gap, record four points:

• Claim: what the investment presentation states.
• Evidence: which records or documents support it.
• Uncertainty: what the reviewed material does not establish.
• Next question: what must be clarified and which adviser should assess it.

For example, finding no IP assignment in the reviewed documents establishes a documentation gap. Further records may resolve it. The decision depends on whether the company has the rights required by its operating model.

This focused review can sit within Molfar Intelligence’s due diligence services. For the wider assessment of an opportunity, see our guide to investment due diligence.

Frequently Asked Questions

How do I verify the assets and contracts behind an investment in a holding company?

Map the holding company, operating subsidiaries and relevant asset owners. Compare ownership records with customer agreements, licences and intercompany documents. Establish which entities perform the activities shown in the pitch and ask transaction counsel to assess the rights connecting them to the investment recipient.

What should I check if a startup licenses its core software from a founder-owned company?

Identify the licensor, licensee and rights covered by the agreement. Ask legal advisers to assess duration, termination provisions and conditions affecting continued use. Document how the licence relates to the startup’s operating model and whether additional records are needed.

How should I assess customer revenue when contracts and payments involve different group companies?

Separate the contracting company, invoice issuer, payment recipient and entity reporting the revenue. Request evidence explaining their relationships. Financial advisers should reconcile the figures and assess how the resulting cash relates to the company receiving investment.

What should I do when the investment recipient’s connection to key assets remains unclear?

Document the specific gap and request the records needed to resolve it. Explain which part of the investment case depends on that connection. Refer questions about ownership, contractual rights or financial treatment to the relevant advisers before approval.

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