Corporate Finance, Deal Advisory
Four tips to make a great first impression with investors
As things begin to go back to ‘normal’ (whatever that means…) and investors begin writing cheques once more, many business owners may be considering looking for investment to capitalise on opportunities that are either emerging as a result of the ever-changing economic environment or looking to reengage with growth opportunities that Covid-19 has put on hold.
Listed below are some relatively simple steps you can take as business owners to make your business more attractive when you first start speaking to investors. These tips will help, not only to enhance the value investors attribute to your company, but also to increase the likelihood of a transaction completing.
1. Present a deck that concisely articulates the investment opportunity
Creating an investment deck that can be shared with investors is a vital element to making your company more investor friendly, particularly in the initial stages of dialogue with investors.
The deck should provide investors with enough information about the story of the business, key USPs, competitive advantages, and opportunities for growth, without giving away too much information and leaving them wanting to find out more.
Being able to articulate your business plan succinctly is critical when pitching your business to investors, and a concise, attractive deck is a great way to start off the relationship with a prospective investor.
2. Set up a fully-stocked data room
A data room is effectively a store of relevant documents that investors will likely need to review in advance of providing capital to a business. This often includes: financial information; tax documentation; key contracts; staff information; legal and regulatory information; property documentation; and more.
Having a data room pre-prepared not only helps to speed up the investment process, but also gives an investor confidence that you are on top of important documentation and implies a good company attitude towards compliance and governance.
3. Know how to show off your impressive and incentivised management team
Investors regularly tell us that as much as they are investing in ‘an idea’ or ‘a company’, ultimately, they are backing a management team to deliver on the business plan. Investors know that no business operates and grows exactly to plan, and it is vital to be able to demonstrate that the management team has the skill and motivation to navigate unexpected challenges, as well as capitalising on unexpected opportunities. This is why choosing who will meet and present to investors, and at what stage in the process, is so key.
It is also vital to show investors that the key members of the senior team are incentivised sufficiently. Within start-ups, often the senior management team are already shareholders, perfectly aligning their interests with that of equity investors. However, we regularly meet business owners that do not have their senior management team adequately incentivised. There are a multitude of ways to incentivise a senior team; share options schemes are popular and are relatively simple to implement. We also suggest designing and implementing bonus structures that encourage a long-term view and sustainable performance.
4. Provide clear, accurate, timely management reporting information
Once you have met an investor it is likely that they will request additional information. This may be in the form of traditional financial information, or perhaps in the form of key KPIs or other non-financial measures of performance.
Being able to provide timely and accurate management information to investors when requested is key for a number of reasons. Firstly, investors need accurate information in order to analyse the proposition and make their investment decision. Secondly, having accurate and timely information instils confidence in investors that you have access to relevant information necessary to make managerial decisions in real time with confidence.
If you are thinking about selling your business or raising external investment – whether now or in the next few years – our Deal Advisory team is offering complimentary ZOOM video-consultations. During the call the team can provide an indicative valuation of your business (including latest thoughts on the impact of Covid-19) and discuss the best timing to start the process given the current M&A market conditions. To arrange your consultation, contact Jack at firstname.lastname@example.org.