Scaling new heights – Fastest 50 companies share their investment-ready insights
1st December, 2021
Scaling a business is reliant on many things.
Strong leadership; the right infrastructure; on-point marketing; a clear purpose; and a team culture that everyone in the company can get behind. But growth is also reliant on a focused financial plan and, often, economic backing through investment to support clear decision making at critical moments in the life of the business.
Here, some of our Fastest 50 alumni share their collective wisdom, alongside Richard Butts and Ian Wilson from Mercia Asset Management PLC. The businesses discuss their experience of preparing to become investment ready, and what that means if you’re planning on scaling your company.
“A vital ingredient for being investment ready is to plan and structure your company in a wholly transparent, coherent way,” explains Richard Butts. “A company structure might make sense to the owner and serve their interests but that may not always attract investment. To be investment ready, the ownership and assets of a business must be clear to see and, vitally, structured in a way that an investor can fully understand. For an investor to commit to a business, there needs to be a comprehensive understanding of how investment will support the growth and development of the business. If the ownership structure isn’t clear or key assets are held outside of the business, an investor, quite frankly, is unlikely to look twice.”
Having led a management buyout at Mediaworks 18 months ago, founder and CEO Brett Jacobson understands exactly what being investment ready means in reality. He says: “To attract investment, which is ultimately third-party ownership, you need to be prepared. You cannot be too prepared in my experience. Be ready for the due diligence. The microscope on your operations, your projections and your plans are intense. As a business, we’d always earmarked ambitious growth, but we could clearly show our investors accurate success in delivering on past plans that gave them confidence in our future predictions. Whether it’s rapid or steady, investors like lines that don’t show unexplained spikes. Predictability, not volatility, is what our growth has been based on and that’s been driven with a tight hand on the tiller. Show your investors you’re running a tight ship. We’ve built the capabilities to transform data into insight, not only for our clients but for ourselves. This enables us to accurately forecast and affect crucial elements in terms of customer retention and profitability, utilisation of resources and where and when to press the button on smart and timely reinvestments in our infrastructure, people and systems.”
Ian Wilson, fund principal at Mercia Asset Management PLC, agrees. He says: “Preparation is everything. Business owners must do the necessary research to ensure their growth plan includes detailed information about the company’s product or service and the markets the business will target. Information about the team and why the experiences and skills in the business are the right fit are vital as is being completely transparent about the amount of funding required, how it will be used and where it will take the business. It’s also important to show that you know where you need to improve and how investment will enable the business to make this improvement. This gives an investor a sense of confidence that the company has a humility and an intellect that is backable and, crucially, a team they can trust.”
When attracting investment, the goalposts certainly change. It’s no longer simply about what works best for the business owner, their interests or expectations but more about the investment, how that will benefit the business and the rewards that will bring in terms of business growth and the scalability of a company.
“Being investment ready requires significant preparation and good advisers,” explains Mark Rutherford, managing director of international battery maker and exporter Alexander Technologies Europe. “The more time and effort spent ahead of launching an investment raise, the more successful it will be. Take the time to prepare a good marketing document, make sure all the historic financials are presented clearly and in a way that requires little additional explanation. Provide an honest appraisal of the historic results and don’t try to hide anything as investors will dig into the details and find out eventually. Also, ensure you select a good local corporate finance adviser and explore what types of investment might be available and for what end goals. Always have those objectives in mind when making such a business-changing decision – one of the biggest you’ll ever make.”
Business funding, when done properly, provides the catalyst for growth. A structured, progressive investment plan outlines exactly how the funds will be used, in what way, and when. “Being investment focused is almost as important as being customer focused,” adds Richard. “As any business owner will tell you, the customer always comes first. That’s the same mindset leaders must adopt when it comes to investment. If they want the capital needed to move to the next stage of growth, the business must be investor friendly. Leaders must demonstrate tangible goals and a clear, actionable plan that illustrates how funding will enable the business to reach these goals. Businesses must also implement good governance and reporting to ensure that performance and results can be measured.”
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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