How is your SME business seen by PE investors?

Are you are planning an exit from the business? You need to understand how your company is seen by investors before running into the sales processes or negotiations. Finding the right investors is also valuable and this is difficult unless you have a clear description of your business and an understanding of how it fits into investor profile and what kind of opportunities your company can create for the potential investor.

In the below chart I have described 5 major categories of how your company can be seen by the investor. They all need different roles from the new shareholder. They need to look at the investment from a fit and opportunity point of view, what are the investment needs and the payback time, how big is the potential upside, and what kind of support is needed from the investor.

One could describe the attractiveness of the acquisition as a sum of the fit of the business and opportunity.

Being different, unique, and having a good competitive position increases the interest of the investors.

There are always at the same time multiple opportunities that must be compared. The better the company pitch is presented the easier and faster it is for the investor to position the business within the portfolio of opportunities.

Below some key criteria for how well the business is fitting into the company portfolio of the investor.

Future cash flow, growth, scaling possibilities, and needed financing and investments are key when calculating the upside and payback for the investor.

I help SMEs looking for exit and PE companies in their deal sourcing. The idea is to find win-win deals for both parties.

Heikki Hyvärinen

Founder, Partner

H&H Advisors Oy

email: heikki.hyvarinen@hhadvisors.fi

phone: +358 40 9695455