AUSTIN, Texas – March 21, 2018 – Knowing your financials and telling it in a compelling way will get your company the biggest valuation in the high-stakes world of private equity investment, says the CEO of a global financial firm that disrupts the way businesses achieve financial clarity and scalability.
Before making a bid for a merger or acquisition, prospective investors always want to inspect the candidate firm’s accounting and financials. However, too many executives and sell-side stakeholders underestimate just how critical that financial data is – not only the accuracy of those numbers, but their presentation and context, says Consero Global CEO and co-founder Scott Tynes.
This year alone, Consero’s clients Skyword, a content marketing software and services company headquartered in Boston raised $25 million in funding and SparkCognition, an artificial intelligence company headquartered in Austin, Texas announced an official close of $56.5 million in funding.
Consero delivers Finance As A Service (Faas) to help CEOs and CFOs obtain better financial information, optimize operational processes, and lower their back-office costs through its SIMPL cloud-based technology platform. Part of Consero’s work is to help business leaders give well-organized financial information to its clients for the best PE investments.
“Imagine you are at home and a visitor rings the doorbell unannounced,” says Tynes, comparing equity investor prospects with homebuyers. “This is what it is like to work with investors. Your house is messy but you have to invite them in.” Like a clean house, a well-organized and buttoned-up F&A function will convince buyers a company is worth the asking price or more.
Tynes gives the following tips to help company CEOs and CFOs create value with investors:
Create a good story to drive appeal. To do this, consider:
- Get the CEO and CFO aligned with the company story.
- Don’t go too far on crafting your story; make sure it is plausible.
- Tell an exciting, ethical and realistic story for early engagement.
- Remember the first goal of the VC/PE meeting is to get the second meeting.
- Don’t share everything. Present information that supports your story.
- Slice and dice the numbers to tell a compelling story.
Make sure the story matches your metrics. To do this, consider:
- Customer acquisition cost
- Lifetime value
- Top line revenue growth
- Employee retention
- Average deal size
- Monthly recurring revenue per customer
Once these goals are achieved, businesses will have a firm grasp of their accounting and financial positions to not only close deals faster, but they also can earn even larger valuations as a result, says Tynes.
