1. Who is the management team of my investment?
It is critical to know who the managers of the investment are. It should be demonstrable what their experience, expertise, educational background, character, and capabilities are. The people who run the investments have the greatest influence on the success or failure of a business.
2. How is management compensated?
Knowing how a manager is compensated, and for what activities, is critical. Having an understanding of what activities a manager will be compensated for will provide insight into how they are motivated. We believe it is imperative that managers make higher earnings after investors make initial profits. This aligns management and investor interests.
3. What is the business model?
You should have a general understanding of how businesses you invest in work. We believe that investors should understand how the basic business plan of an investment would generate earnings. It should be clear how the business could make money. Most investments sold by Raintree are fairly straightforward. We want our investors to be comfortable about the investments they are making, therefore we generally steer clear of high tech or complex businesses.