BDO LLP | PRIVATE EQUITY
12
4.
HOW DO YOU SOLVE A PROBLEM?: How do your products and services solve
a particular problem experienced by people or businesses? How does your solution to a problem win you customers and enable your business to grow? This is your business proposition – and it is a key part of your story. Investors recognise that your business may be able to grow to a certain size by meeting customer needs opportunistically. However, to be able to reliably scale to 2-3 times your current size, you need a more proactive approach. Investors in tech businesses are looking for this growth profile. They also like to back businesses who use technology to improve internal processes and/or enhance customer experience. You don’t necessarily have to develop this tech in house, you can adopt third -party technology. TIP. Get comfortable articulating your business proposition and improve your tech capabilities where necessary.
5.
HOW DO YOU MAKE YOUR MONEY?: Investors are initially attracted to tech businesses with growing profitability. But for this initial attraction to last and result in a deal, they will want to understand how profits are produced and will continue to be produced. Typically, investors will want to: • know how much profit comes from each product and service line • establish the profitability of each customer • establish if and how profits are repeatable and how these profits turn into cash TIP. Present as much detail as possible about how your business generates repeatable, cash profit
3.
COMPETITION, WHAT COMPETITION?: All tech businesses have existing and
potential competitors, whether you know them or not. Investors do not look favourably on businesses who dismiss or minimise their competition. Investors will want a proper analysis of your key competitors and their strengths and weaknesses. They will need to know how this competition might impact the potential of your business. And within tech specifically, competition tends to be very strong.
TIP. Present an in-depth competitor analysis, showing opportunities and risks.
• Your desire for a stake in the business • The realism of your forecasts • Your market and your competition • How your business meets a need • How you drive profit by meeting that need
BOOST YOUR CHANCES OF SUCCESS Don’t let your hard work be undermined by these avoidable mistakes. When pitching to PE as a tech business, you should understand and be able to articulate:
Get this right, & you boost your chances of a successful PE deal. Good luck!
Made with FlippingBook HTML5