10 QUESTIONS EVERY INVESTOR WILL ASK YOU
As an active search fund investor (7 deals in 2020), I'm often asked by searchers what questions they should be able to answer for investors.
As such, I thought I'd write a quick blog post with my perspective.
Here are 10 questions that you should be able to answer:
-Where did you find the deal? Why is the owner willing to sell?
-What does the business do? What are the headwinds/tailwinds of the industry?
-What is the competition? Why does your company "win"?
-What are the growth levers on the business?
-How many employees? What is the transition plan? Who are the key employees?
-What in your background makes you a great fit to run this business?
-What is the price? What is the EBIDTA multiple? How much debt (bank and seller)?
-Who are you using for your deal team (legal, bank, diligence)?
-How much are you raising? What are the deal terms?
-Where are you in the process? IOI stage? LOI stage? Close date?
-What is your plan to return my capital? Exit strategy? Recap? Long-term hold & dividends
You don't have to all the answers now but you should have a thoughtful answer on how you will "get to an answer" and the timeline to get there.
If you'd like more "Tips for Self-Funded Searchers from an Investor" check out my recent webinar at Searchfunder (https://www.searchfunder.com/event/view/280) and email me for a copy of the updated slides [redacted] ). Sign-up for my monthly musings at bit.ly/etamusings
And comment below with questions that should be added to the list.