The Private Equity Toolkit. Tamara Sakovska

Читать онлайн книгу.

The Private Equity Toolkit - Tamara Sakovska


Скачать книгу
by registered mail or by courier. Follow up a few days later by sending your letter again via email. One week later, call the company to follow up and hopefully set up a meeting.

      You should expect that maintaining contact with the prospective companies will take significant time and effort. One of the worst things you can do at this stage is fail to follow up with a potential deal target because you are distracted or busy. It is important to stay organized and take notes of the multiple touch-points you have had with each company by phone and email. If one of your deal targets is not prepared to start a dialogue with you due to a timing issue, schedule a reminder in your calendar to get back in contact with them in due course. Make sure both parties understand what next steps are discussed, follow up as agreed and never lose a promising deal prospect.

Text reads, I C E B E R G. G is shaded.

      Is there a wrong way to conduct your first meeting with the company? Yes, absolutely. In my experience, this happens when investors do not listen patiently enough to the company and prioritize their own needs over those of the deal target. For example, sometimes you just have to let the CEO veer off-topic for a period of time to avoid alienating him. Also, you have to suppress your inner desire to jump straight into clinical detail, even if you suspect potential deal breakers in these areas. As a rule, exploring recent strategic failures, asking pointed questions about the financials, or requesting a detailed data set are not appropriate actions at this stage. Stay away from sensitive topics and proprietary information, especially if you have not yet signed a confidentiality agreement. In summary, the first meeting with the company should not feel like an interrogation. It should feel like a friendly conversation between two likeminded parties forming a productive long-term partnership.

       Create rapport. Think about good ways to break the ice. A good starting point might be to mention topical industry news or congratulate the company on reaching a recent milestone. Focus on demonstrating empathy, having a sense of humor and, if appropriate, mirroring the attitude and tone of the people you are meeting.

       Establish need. What is the company's current positioning and what is its vision for the future? What are the most pressing needs and problems of the business? How can your capital help?

       Build value. This is an opportunity to introduce your fund, demonstrate your industry expertise and share your proprietary insights acquired through deep research. You need to come across as an empathetic and knowledgeable partner.

       Create desire. This is a good time to mention your fund's other relevant successful investments and explain how you were able to create tangible benefits for your portfolio companies. Provide enough detail about the issues faced by other businesses and describe how your fund was able to resolve them. Draw any meaningful parallels between your past investments and current situation.

       Overcome objections. Acknowledge any concerns that the company might have about accepting a private equity investment from your fund. Listen attentively and try your best to understand the company's perspective. Then isolate each objection and try to deal with one concern at a time. You might need to follow up with additional information after the meeting to strengthen your position.

       Close. One of the best possible outcomes of this meeting will be agreeing with the company on a set of actionable next steps. Hopefully, you managed to establish a strong bond with the management team and prepare a fertile ground for any subsequent follow-ups.

      What happens next? There are three possible scenarios. The first one is that the initial meeting equipped you with enough disappointing information about the business to enable you to conclude that you are not interested in moving forward. In this case, it is best to thank the management team for their time, provide them with your honest feedback about why the company does not quite fit your mandate at present and discuss what business adjustments would be required for this decision to change in the future. The second scenario is that you like the business but you sense that the company will not be ready to accept a private equity investment for a considerable time. In this case, you need to make sure that you communicate your continued interest and schedule a follow-up meeting at some point in the future. I believe that keeping in touch with the company will allow you to build a good relationship with the management team over time and enable you to create enough neural pathways in their minds that might ultimately pave the way to a transaction with your fund.

      Well, you have made it to the end of the ICEBERG Roadmap™. I know: it is a long and arduous journey to read through these 7 steps in detail. However, I believe that this framework (or your own adapted version thereof) will improve your deal sourcing approach and ability to deliver deals. Hopefully, proprietary ones.

      1 1 ICEBERG Roadmap™ is a registered trademark of my company, Lavra Group Limited.

      2 2 For a comprehensive external environment analysis tool, please refer to Narayanan and Fahey (2001). Please refer to Chapter 2 References for a complete citation.

      3 Скачать книгу