Deal preparation
We prepare your financial data for a transaction and act as the key investor / due diligence contact during the process.
Problems our clients are facing
Have limited experience in fundraising from institutional investors
Do not have capacity to maintain the day job and run a transaction process
Are not prepared for a financial due diligence process at short notice
How Finomatic can help
We support technology companies which are preparing for a transaction process, but do not wish to enlist the services of an investment bank and pay a success fee on completion of the deal. We come from corporate finance and investment backgrounds, so we understand what investors are looking for and the factors which drive valuations. We provide support in two key areas: ‘Preparation phase – Exit readiness review‘ and ‘Manage investor / due diligence communications‘.
1. Preparation phase - Exit readiness review
In 2-4 weeks, we prepare all of the financial information you need to present to investors and due diligence providers during the transaction process. Our exit readiness review consists of three main components: ‘Data deep dive‘, ‘LTV:CAC ratio‘ and ‘Business model‘.
Data deep dive
We help you to understand the key drivers behind your historical performance using the appropriate metrics for your business. We will then explain how these numbers can be improved and how they benchmark against some of your peers.
LTV:CAC ratio
We analyse your Lifetime Value of Customers (LTV) and Customer Acquisition Cost (CAC) in detail during our review. Investors and acquirers need to be satisfied with the LTV:CAC ratio as it demonstrates the sustainability of the company’s business model.
Business model
We work closely with you (and your investors) to understand your business model in detail. This ensures we track the relevant data points. This process helps determine if your business would benefit from a capital injection and which funding structures it could support.
| What are investors looking for? | We analyse your financial data to highlight that... | Why is it important? | How investors measure it |
|---|---|---|---|
| Sustainable business model | You can acquire and service clients in a profitable manner. | It is vital to demonstrate your path to profitability. | - LTV:CAC - Rule of 40 |
| High growth | You are making noise in your sector. | Investors want to identify the next disruptive technology early in its growth journey. | - ARR and CARR growth |
| Strong customer retention | Your customers love your product. | If your customers keep spending more with you, it shows that something is working! | - $ retention - Logo retention |
| Comprehensive business plan | You have a deep understanding of your business. | Investors gain confidence from seeing a clearly organised business model and analysis. | - Cash runway - Growth strategy |
| Clear capital deployment strategy | You have a clear medium and long term strategy. | Investors always want to know why you want the money. | - Product development - Sales & marketing |
2. Manage investor / due diligence communications
Throughout the transaction process, we support our clients in three key areas: ‘Monthly refresh‘, ‘Investor communications‘ and ‘Due diligence communications‘.
- Update the financial material (i.e. financial model and customer-level analysis) throughout the transaction to include the latest results
2. Investor communications
- Act as the key point of contact
- Explain the financial information
- Manage additional data requests before receiving LOI
- Act as the key point of contact
- Review requests and work with your team to populate the data room
- Answer financial questions and assist your team with additional ad hoc analysis as required
We manage the ongoing transaction process so that you can focus on your day job
Why it matters
We ensure that our clients are ready for a corporate finance transaction at any time. This is vital because, outside of the sustainability of the actual business model, maximising your valuation on exit is primarily affected by the following four factors.
1. Momentum
Problem – Transaction processes are often delayed by irregularities in the financial data.
Solution – With the correct data, you can: keep parties engaged so they do not lose interest and look elsewhere.
2. Competition
Problem – Interested parties drop out of the process if they cannot trust the data.
Solution – With the correct data, you can: solicit other buyers to create a more competitive bidding process.
3. Timing
Problem – Economic circumstances, financial markets, investor sentiment and valuation multiples change quickly.
Solution – With the correct data, you can: sell at the opportune moment. Delays can significantly impact the purchase price.
4. Positioning
Problem – Interested parties withdraw if they cannot understand the key business drivers.
Solution – With the correct data, you can: articulate a clear vision and align the expectations of both shareholders and interested parties.
Why you need to act now
You may think “can I just wait until we are ready for a fundraising process?”. BUT, having this information available at all times allows you to:
Capitalise on opportunities – Corporate finance transactions often take six to nine months to complete and by then, the opportune moment to sell may have passed.
Maximise company value – Potential investors need to see all of your financial data in this format anyway. Why not leverage these valuable insights in the day-to-day management of your business? This will help you to grow and optimise your positioning at the point of sale. Common focus areas include: identifying optimal customer profiles and enhancing productivity.
