Confidential© Equiteq 2015 equiteq.com
Growing equity, realizing value
Why it’s important to buyers/investorsManagement Quality
Confidential© Equiteq 2015 equiteq.com
Equiteq – brief intro
Outline
2
8 Levers of Equity Value
Lever 8 - Management Quality Basics
Buyer focus on Management Quality
10 Management Quality Tips
Confidential© Equiteq 2015 equiteq.com
Growing equity, realizing value
Equiteq – a brief intro
Confidential© Equiteq 2015 equiteq.com 4
Equiteq is the leading M&A firm focused on the consulting and IT services sector
What we do for our clients Global presence and consulting industry credentials
Equity value realizationSale to a Strategic Buyer or Financial Investor
Sell40+ Deals
Value creation and sale preparationBetween 1 and 5 years ahead of a desired transaction
Prepare300+
Clients
Why we’re different• Deep domain expertise in the Consulting sector
• Add value and engage at any stage in the exit destination journey
• Unique blend of consulting, corporate finance and investment banking skills
NEW YORK
LONDON
SINGAPORE
Established in 2004 Regular AMCF USA speaker
40 people across 3 continents Regular MCA UK speaker
Clients in 27+ countries Widely published in industry media
Confidential© Equiteq 2015 equiteq.com
Growing equity, realizing value
Growing equity value in preparation for an exit
The 8 Levers of Equity Growth
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Management Quality is just one of the 8 levers in our Equity Growth Wheel™ but it has a 10/10 weighting
Market Proposition
IntellectualProperty
Quality ofFee Income
Sales &MarketingProcess
ConsultantLoyalty
ClientRelationships
Sales &Profit Growth
ManagementQuality
EquityGrowthWheel
Confidential© Equiteq 2015 equiteq.com
Importance to Buyers of Management Quality• Financial investors say they invest in
management teams first, firms second• The quality, capability, depth and breadth of the
management team are fundamental to building confidence to invest
• Predictability and scalability of value growth is the main reason for buyer scrutiny
Key Messages• Be crystal clear on vision and strategy• Delegate profit targets and manage performance• Recruit the best management you can afford• Balance working ‘on’ and ‘in’ the business
7
Strong leadership and management is key to value growth and will be the focus of much buyer due diligence
Market Proposition
IntellectualProperty
Quality ofFee Income
Sales &MarketingProcess
ConsultantLoyalty
ClientRelationships
Sales &Profit Growth
ManagementQuality
EquityGrowthWheel
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Buyers look for evidence of management competence
Picture of several CVs Market Environment
Vision
Goals
Business Plan
Governance
KPIs
ResultsQ1 Q2 Q3 Q4
2015 P&L
Plan Actual
Job Experience Financial CompetenceLeadership ability
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Buyers look for depth and breadth of management to both de-risk individuals (often founders) and provide scalability
Consulting Delivery
Project Management
Client Management
Business Unit leadership
Board leadership CEO/CFO/COO/CXO
Country Head
Client Managers
Project Managers
Consultants
Client Managers
Project Managers
Consultants
Market Sector Head
Client Managers
Project Managers
Consultants
Function Head
Functional Managers
Functional Seniors
Functional execution
Buyer Due
Diligence
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Buyers like to see compensation incentives that drive growth and scalability
Consulting Delivery
Project Management
Client Management
Business Unit leadership
Board leadershipEquity and Company profit
Equity and BU/Company profit
(Equity) and Client/Company profit
Company/Project profit
Company profit/personal contribution
Increasin
g risk %
Confidential© Equiteq 2015 equiteq.com
Growing equity, realizing value
Getting on the right path
Management Quality Tips
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Selected from our ‘100 Tips Guide to profit and equity growth’
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Take advice and ALWAYS have a competent FD/CFO
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Lead the way and plan the future
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Share the load with others and maintain your culture
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Manage supply/demand tightly and keep KPIs up-to-date
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Buy the best functional staff and IT capability you can afford
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One critical ‘Do’ and one ‘Don’t’
DO DON’T