The most important person NOT on your Board – your Investor

19.8.2020

Every business owner has an opinion on the value of what they have created. The basis for this valuation can vary wildly; from independent valuations done by an accountant, to asset value, to listed trading multiples or reported transactions multiples as comparisons, all the way to what you’ve heard through word of mouth, “Joe sold his business for a multiple of five times”. However, the opinion that is rarely at the front of mind of the owner, and all that matters at the end of the day, is the value that an investor is prepared to pay.

Similarly, when Shareholders, Executives and Boards gather to set the direction for the future of their business, questions commonly asked may be:

  • What size / scale are we looking to achieve?
  • What markets should we be in, stay in, or enter?
  • Should we expand our product offering?
  • How do we increase our revenue / margin / profit? 

While these are all good questions, the question that is not asked enough is, what are future investors going to value?

If you plan to sell your business in the future, or raise capital to grow (whether equity or debt), it is important to think about your business from a potential investor’s perspective:

  • What are investors in businesses like us looking for?
  • How will they value our business?
  • What parts of the business are more / less attractive to a potential investor?
  • What risks in the business reduce our valuation?
  • What growth opportunities increase our valuation, and how do we get credit for these?
  • What is our timeframe, and how does this align with the timing of an investor?

We see a lot of founders building their business without an exit strategy or a thought for who may eventually acquire the business. Not only may this limit the pool of potential investors and increase the risk profile of the business, but the future value of the business may be eroded significantly.

While not always the easiest thing to do when focused on the day to day of running of the business, examining value through an investor’s lens can provide a more objective view and help shape your strategy. In the long term, this will help you to maximise the value for your business, and the likelihood you can exit on favorable terms. In the short term, instilling best practice will likely create value for the existing stakeholders as well.

So the next time your leadership get together to plan the future, make sure you ask yourself; what is an investor looking for in a business like this? And if you want to know how to answer that question, ask InterFinancial about their Strategic Options Analysis Process.

31.3.2021

Sector Dashboards March 2021

Our monthly dashboards cover seven key sectors of focus, with each sector built up by several subsectors that cover similar companies based on; products, end markets, services, assets classes or other characteristics. The publications include all companies listed on the Australian Stock Exchange that are actively traded and covered by research analysts, and hence have […]

Read more
31.3.2021

Strategic Planning Tips For Successful Acquisitions

Australian M&A activity is on the rise, with $8 billion in transactions closed so far this calendar year, up 30% year-on-year.1 Both financial and strategic investors are taking advantage of cheap debt and strong economic tailwinds to identify value adding acquisitions. Of course, identifying acquisitions and making them work are two very different things. A […]

Read more
26.2.2021

Sector Dashboards February 2021

Our monthly dashboards cover seven key sectors of focus, with each sector built up by several subsectors that cover similar companies based on; products, end markets, services, assets classes or other characteristics. The publications include all companies listed on the Australian Stock Exchange that are actively traded and covered by research analysts, and hence have […]

Read more
16.2.2021

IFL Ventures advises Frontline Accounting on its 80% sale to Sierra Madre

InterFinancial, through its IP focused division IFL Ventures, has advised business process outsourcing (BPO) company, Frontline Accounting on its 80% sale to the Philippines-based PE firm Sierra Madre. Frontline Accounting is a provider of offshore staffing solutions from the Philippines to accounting firms based in Australia, UK and USA. It experienced strong growth since its […]

Read more
28.1.2021

2020 Year in Review – a Pandemic, a Trade-War, and All-Time Highs

Financial Markets Overview 2020 proved to be a year of challenges (to say the least!!!). COVID, drought & bushfires, trade wars and Australia’s first economic recession in 29 years – 2020 had it all. The March Quarter was the most volatile trading period in history, with financial markets reaching all-time highs in February 2020 before […]

Read more
21.1.2021

Sector Dashboards January 2021

Our monthly dashboards cover seven key sectors of focus, with each sector built up by several subsectors that cover similar companies based on; products, end markets, services, assets classes or other characteristics. The publications include all companies listed on the Australian Stock Exchange that are actively traded and covered by research analysts, and hence have […]

Read more
17.12.2020

Idea 11 & PieLAB aiming for the cloud

IFL Ventures acted as corporate advisor to Brisbane based IT consulting company Idea 11 on partnering with Australian based diversified investment group PieLAB Council Capital. PieLAB has made a significant investment in the full-stack AWS IT company but it is not the capital backing that drove Idea 11’s decision.  “In PieLAB we found not only […]

Read more
17.12.2020

Sector Dashboards December 2020

Our monthly dashboards cover seven key sectors of focus, with each sector built up by several subsectors that cover similar companies based on; products, end markets, services, assets classes or other characteristics. The publications include all companies listed on the Australian Stock Exchange that are actively traded and covered by research analysts, and hence have […]

Read more
08.12.2020

Ord Minnett investing wisely

InterFinancial would like to congratulate Ord Minnett on its acquisition of E.L. & C. Baillieu. Ord Minnett is Australia’s leading private wealth management firm with over $35 billion of assets under management. E.L &C. Baillieu is a prominent Australian owned wealth management firm, specialising in stockbroking, private wealth management, corporate finance, institutional equities and in […]

Read more
08.12.2020

Austal to set sail with BSE Maritime Solutions

InterFinancial would like to congratulate BSE Maritime Solutions on its sale to Austal Limited (ASX:ASB). BSE Maritime Solutions is a leading ship repair and support business for defence, commercial, tourism, and luxury vessel customers, operating in Brisbane and Cairns. Austal is Australia’s global shipbuilder and defence prime contractor designing, constructing and sustaining some of the […]

Read more