Our team takes you through a four phase process that is complete and thorough.
Phase I: Market Insights and Business Intelligence
Phase II: Organic and Inorganic Growth Options
Phase III: Preparing You to Attract Growth Capital from Investors
Phase IV: Negotiating the Best Terms of the Investment with the Investor
PHASE I: MARKET INSIGHTS AND BUSINESS INTELLIGENCE
Successful business growth strategies begin with market insights. The source of insights lies within and across your market ecosystem. We believe it is important for companies to develop robust systems and processes to ensure a continuous flow of market insights into their business. This is a key strategy for developing the demand side of your business.
SDR Ventures’ Consulting Division assists clients with this “market insight” through a number of internal and external market research and business analytic techniques including:
- Current strategies review analysis
- Gap analysis
- Market segmentation analysis
- Market opportunity and competitive analysis
- Macro industry trends (growth/decline/consolidation) analysis
- SWOT analysis (Strengths, Weaknesses, Opportunities and Treats)
- Financial analysis for enterprise value creation and exit strategies
- Organizational structure growth analysis
PHASE II: ORGANIC AND INORGANIC GROWTH OPTIONS
Once the Market Insight review is completed, our team overlays what we have learned with strategy options for both organic and inorganic growth.
Business growth and expansion strategies are unique in every business. However there are broad categories of organic growth strategies. A comprehensive review of all strategies listed below is analyzed (where appropriate) to determine that every possibility is examined.
- New Product/Service Development
- Market Expansion Strategies
- Product Diversification Strategies
- Product/Service Line Extensions
- Bundling Products and Services
- Niche Marketing
- Edge Strategies Near the Core
- Brand Building
- Dual Branded Product Lines
- Private Label Strategies
After the organic growth path is fully examined, our team reviews inorganic options such as those listed below:
- Joint Ventures
- Vertical Solutions Marketing
- Business Channel Partners
- Reverse Mergers
Once the review is completed, Comprehensive Growth and Expansion Plans are prepared. It may be a critical component to the success of your company to attract investor capital.
PHASE III: PREPARING YOU TO ATTRACT GROWTH CAPITAL FROM INVESTORS
How many times have you thought, “If I only had the capital, I could really grow this company?” OR, your CFO tells you, that your growth is coming too fast and is outstripping your earnings. In either case, you need capital to continue to grow. Lacking sufficient capital to grow is the major constraint for most middle market companies to reach that next level of success. Their inability to access capital is often rooted in their inexperience to prepare their companies to attract investors.
SDR Ventures’ consultants prepare you for the investor marketplace. Phase III begins with a seven-step process that prepares you to think like an investor and subjects you to the due diligence process that most serious investors will put you through.
- Quantify the Business Value
- Eliminate Worthless Inventory and Debtors
- Audit Your Books
- Strengthen Legal and Contractual Affairs
- Install and Improve Operating Systems
- Prepare Your Management Team
- Prepare for Due Diligence
Earlier, we said that our team prepares you to think like “an Investor”. Most investors look for companies that come close to their investment criteria. Investment criteria vary depending on the investor, their goals and the kind of target investments they are looking for. But for the most part, most investment criteria have all of these characteristics:
- A Proven Entrepreneurial Management Team in Place or Working Along with Us
- A Proprietary Technology or Uniqueness of Product or Concept
- An Ability to Achieve Significant Growth Quickly Through Market Penetration, Market Expansion, Defined Market Niche or Acquisitions
- An Ability to Produce an Exceptional Return on Invested Capital Coupled with Strong Positive Cash Flows
- Sustainable Competitive Advantages
- Under-Appreciated Sources of Value
- Exiting Within a Three to Seven Year Time Frame
- A Range of Potential Exits
- A Strong and Realistic Growth Plan Including Exit Strategies for the Investors
PHASE IV: NEGOTIATING THE BEST TERMS OF THE INVESTMENT WITH THE INVESTOR
By this time you may have one or more interested investors. This final step is critical to you closing the deal and receiving the necessary capital to reach your financial and growth objectives. We stay with you and help you and your other professional advisors negotiate the terms of the deal right through the closing of the transaction. We will help guide you through the Letter of Intent (LOI), Terms Sheet, Definitive Agreement(s), any Side Letters, Carve Outs and Closing Documents.
Major components of the transaction frequently require negotiation of the following documents:
- The Pre-Money Valuation of Your Company
- The Post-Money Valuation of Your Company if Investment is in Tranches Over a Period of Time
- The Amount of the Investment Required Over What Period of Time
- The Key Performance Areas Triggering Each Tranche
- The Sales and Profitability Milestones
- A Clear Definition of How the Funds are to me Allocated
- Can the Existing Shareholders Take Any “Chips” off the Table as Part of the Investment?
- Pre and Post Due Diligence Criteria Including:
- Preliminary Review and Initial Evaluation
- In Depth Legal Documents Review
- In Depth Financial and Accounting Review
- Amount of Equity Being Given up by the Shareholders
- Operating Control of the Company
- Acceptable Restructuring of the “Capital Stack”
- Number of Investor Board Members
- Structure of Investment
- Debt Restructuring
- Management Restructuring
- Covenants, Indemnities
- Key Financial Metrics
- Down Side Protection Agreements
- New Employee Agreements
While this covers major areas that are typically negotiated, each deal is unique unto itself. SDR Ventures consultants have years of experience and subject matter expertise that can be a significant help in closing the transaction.
For further information regarding SDR’s strategic consulting capabilities, please contact:
Managing Director, Consulting Division