1. How to Present your Company to Acquire
an Outside Investor,
Özyeğin University – Istanbul, 19 July 2012
Investment
Management
1

2. Why do you want
an outside investor?
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3. Why does an outside investor
want to invest?
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4. Investors prefer high returns and low risk
? $ ?
Returns need to be in balance with Risk
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5. Which company would you invest in?
TURNOVER
Year -3 Year -2 Year -1 Year 0 Year 1 Year 2 Year 3 CAGR (-3,0) CAGR (0,3)
Company 1 100 200 300 400 450 500 550 59% 11%
Company 2 10 50 75 200 500 1000 2500 171% 132%
Company 3 0 100000 105000 110000 N/A +++%
Company 4 200 500 800 10000 9000 12000 12500 268% 8%
NET CASH FLOW
Year -3 Year -2 Year -1 Year 0 Year 1 Year 2 Year 3 CAGR (-3,0) CAGR (0,3)
Company 1 -20 -50 0 100 20 50 100 -271% 0%
Company 2 0 0 20 100 130 150 150 N/A 14%
Company 3 -50 -50 -100 -150 N/A 44%
Company 4 10 20 25 40 60 100 125 59% 46%
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6. Is your Company PSS?
Profitable
&
Scalable
&
Sellable
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7. Profit & Loss: Past,Present and Future
Financial € ‘000 2010 2011 2012 2012 2013 2014 2015
Summary YTD (exp) (est.) (est.) (est.)
Net
Revenue
% growth
Gross
Margin
Profit
% growth
&
Loss EBITDA
% growth
Net
Income
% growth
Business
Specific
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8. ‘Profit is an Opinion,
Cash is King’
8

9. CF-Statement, BS equally important
Financial € ‘000 2010 2011 2012 2012 2013 2014 2015
Summary YTD (exp) (est.) (est.) (est.)
Work Cap
Change
(+/-)
Tax
Cash
CAPEX
Flow
Mainten.
CAPEX
Investm.
Interest
Total
Assets
- Fixed
Balance - Cash
Sheet Equity
Liabilities
- Bank
Debt
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10. Company
Company
• Business lines, position in the market
• Value proposition and business model (how does the company (plan
to) earn its money?)
• Key success factors
• Accomplishments (e.g. brand awareness, page ranking, patents)
Industry
Industry
• Industry size, growth, trends, segmentation
• Description of main competitors, marketshares
• Threat of substitutes, barriers to entry, easiness to copy
• International perspective
• Was it proven elsewhere?
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11. Management and Shareholder structure
Management and Shareholders Structure
• Ownership structure and legal structure
• Concise biography on each individual of the entrepreneur team
• Management Team and indication of their compensation
• Involvement in other businesses
• Potential conflicts of interest
Investment Thesis
Investment Thesis
• Reasons to invest in order of importance; each reason further clarified
• What are the drivers of value growth, the explanations
Risks
Risks
• All risks that can be identified, each risk further expanded on,
• Risk mitigators to be indicated and clarified
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12. Let’s talk about Risk
Country Risk
Industry Risk
Company Risk
- Business risk How can each risk
- Financial risk
be mitigated?
- Legal risk
The Entrepreneurs
Has it been done before?
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13. Story and Use ofof Funds
Story and Use Funds
• Business plan (!)
• Explanation of growthdrivers in topline/bottom line and EBITDA
• In case of capital injection use of funds description
• What will be done once invested, what actions to be taken
• What is the story aimed at for successul exit after what time span
InvestmentValue and
Transaction Transaction
• Description of proposed transaction
• Proposed valuation backed by a DCF-model
• Multiples research (transaction and publicly listed multiples)
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14. ReturnAssumptions
Return Assumptions
• Key assumptions for exit
• Different scenarios based on different growth rates and EBITDA targets
– Negative scenario
– Realistic scenario
– Positive scenario
– Sensitivity Analysis
• Potential trade buyers to which the financial investor would exit
• Down side protection
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15. Required Returns - Professional Investors
Ingoing Estimated
Type of Annual Minimum
Financing Returns - July 2012
Bank Debt €,$ (solvable company with equity) 7-8%
Bank Debt TL (solvable company with equity) 16-18%
Infrastructure Investment Fund €,$ 15-20%
Mezannine (Convertible Loan) €, $ 20%
Private Equity (company w/ track record) €,$ 25-35%
Venture Capital €,$ 50%
If you can do it alone, why take an investor in?
Note: returns are indicatiive, averages, per investor these numbers may be different
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16. Relevant Topics other than Valuation
Grow faster, accomplish critical mass first
Business specific added value of the Investors
- Other invested companies
- Expertise
- Experience
- Network
Access to further forms of financing
-Financial investor brings standing for bank credit
Chemistry / Trust with the investment team
Corporate governance improvement
Defensive move
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17. THANK YOU
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