07 PRIVATE EQUITY | BDO LLP
ARE YOU READY FOR PE INVESTMENT?
Why is it important for your tech business to be ‘investor ready’? Well, your chances of a PE deal going through is strongly linked to your level of readiness. When a PE deal process fails it is very frustrating for both management and the prospective investor. In most cases, both parties have expended significant amounts of time and effort. There are many and varied reasons why a deal can fall through, but one that is consistently cited by investors is that a business was not “ready” for investment.
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HOW STRONG IS YOUR MANAGEMENT TEAM? Your management team must have depth and breadth. A business must have a leader, but it also needs strong senior staff across operations, sales and finance. An investor will be nervous if your tech business is dominated by, or is too reliant on, one individual who directs and controls the senior team. Following the pandemic, investors have added another layer of questioning around dealing with crisis and disruption. They will want to know your senior team’s approach over the pandemic and whether you took the opportunity to react to the changes and reset your strategy. A good example of this is accelerating the adoption of technology to improve internal efficiency and/or enhance customer experience. It will not reflect well on the team if your approach was to simply do more of the same. PE investors will not be put off by the need to fill gaps in the management team. A PE house will often be able to add value by attracting quality executives to the business.
So what does being ‘investor ready’ mean for a tech company and how can your business get there?
To find out, you need to think like an investor.
The seven key questions to ask are:
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