why quality management teams are the key to selling

Confidential© Equiteq 2015 equiteq.com

Growing equity, realizing value

Why it’s important to buyers/investorsManagement Quality


Equiteq – brief intro

Outline

2

8 Levers of Equity Value

Lever 8 - Management Quality Basics

Buyer focus on Management Quality

10 Management Quality Tips



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



Growing equity value in preparation for an exit

The 8 Levers of Equity Growth


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


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


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


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


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 %



Getting on the right path

Management Quality Tips


Selected from our ‘100 Tips Guide to profit and equity growth’


Take advice and ALWAYS have a competent FD/CFO


Lead the way and plan the future


Share the load with others and maintain your culture


Manage supply/demand tightly and keep KPIs up-to-date


Buy the best functional staff and IT capability you can afford


One critical ‘Do’ and one ‘Don’t’

DO DON’T