Sources of Equity. John Bowe Mazars Corporate Finance

Transcription

1 Sources of Equity John Bowe Mazars Corporate Finance

2 Contents 1. Sources of Equity in Irish Market 2. What equity providers want to see in a proposal 3. Case study of equity lead transaction 2

3 Sources of Equity 3

4 Different types and sources of equity High Net worth Business Angels Venture Capital Sources of Equity Friends / Family Private equity 4

5 Business Angels Business Angels / High Net Worth Individuals / early fund Sector Interest Can contribute skills and knowledge Likely to want a meaningful interest 5

6 Venture Capital Venture Capital Provide long term equity finance for start up or early stagecompanies Typically minority investments Added benefits contacts, commercial and strategicexpertise On-going reporting requirements to consider Control issues to consider 6

7 Venture Capital 7

8 Employment Incentive Investment Scheme (EIIS) Tax Relief incentive scheme Company needs to be < 7 years old Funds BDO Davy Blake Hughes Goodbody 8

9 Private Equity 9

10 WHY NO HISTORY OF PRIVATE EQUITY? Culture Excessive Banking market which was effectively taking Equity risk Education of benefits of PE 10

11 Private Equity Type Solutions Growth Capital Deleverage Roll-over from key management Shareholder Organisation Acquisitions 11

12 What do private equity want Growth potential Strong team Good management information Ability to create Value Expanding into new markets, new products, increase capacity, acquisitions 12

13 Advantages of Private Equity Flexible form of finance Help with business strategy Will challenge the team Access to new markets open doors Allow business owners to de-risk 13

14 Disadvantages You are giving up equity They will want to board seat More financial information They want their money back! 14

15 Private Equity Irish Operators Funds above have 700m + of equity Pick partner which is a fit for you and can add value not just cash 15

16 Private Equity Irish Operators Sample Deals 16

17 17 WHAT EQUITY PROVIDERS WANT TO SEE IN A PROPOSAL

18 WHAT EQUITY PROVIDERS WANT? Strong management experienced make-up and balance Strong competitive position within your sector Cash generation Clear plan for use of funds Ability to realise an Exit

19 PREPARATION KEY Business Plan / IM setting out details of:- History - description of business and its development Services - emphasis on significant and distinctive competitive differentiators Market Analysis description, size, trends, growth rates, competitors and competitive positioning Operations description of nature and extent Profiles - of Management team & experience Growth Strategy how are we going to grow the business Financial historic and forecast, Cashflow IM should address potential concerns and highlight use of funds

20 Case Study XXX Company 20

21 FINDING THE RIGHT PARTNER Background Our client Irish courier company Use of PE funds Shareholder reorganisation which effectively was an MBO Right partner for Management team and delivering right value for exiting founders 21

22 Approach Phase 1 Preparation Preparation of Information Memorandum Preparation of Financial Model Prepare a list of suitable potential funders 22

23 Approach Phase 2 Formal approach to prospective funders Ensure all potential prospective funders are contacted Information Memorandum Obtain offer letter Evaluate terms with client 23

24 Approach Phase 3 Choose short list of preferred partners Organize management presentations Receive second round offers Choose preferred purchaser, awarding exclusivity period 24

25 Approach Phase 4 Co-ordinate conclusion of due diligence by preferred funder Negotiation of terms Completion of relevant legal documentation 25

26 Areas of focus for PE during process Pipeline sales & customers Forecasts / assumptions / cashflow Management team plans for business / experience Growth potential / acquisitions 26

27 PE Due diligence Focus Commercial Financial Legal Why above?. Comfort Around risks, Around numbers, Around quality of team 27

28 Outcome of process Exit shareholders received cash out Management received some cash and also rollover Management majority shareholders Private Equity Partner on board for next phase of growth 28

29 Conclusion Many different types and sources of funding available When looking at equity right partner is key Consult and explore Advisor will help Be Prepared have business plan 29

30 John Bowe Mazars Ireland Harcourt Centre Block 3, Harcourt Road Dublin 2, Ireland Tel: +353 (01)

31 Appendix Introduction to Mazars Corporation Finance 31

32 Mazars Corporate Finance Global Network Irish team leverages Global Reach for client benefit 31

33 Full Service Corporate Advisory Business Disposal & Mergers Fundraisings Private & Public Equity Debt Advisory / Capital Restructuring Acquisitions 5 Management BuyOut 6 Valuations We focus on client needs 33

34 Our Credentials a selection of our recently closed transactions Trade Sale of Capital Raising for Sale Capital Raising for Sale Buy=Side & Debt Advisory Undisclosed Strategic Advisor March 2016 Closed Undisclosed Strategic Advisor December 2016 closed Undisclosed Advisor Shareholders April 2017 Closed 10m Finance Dublin Deal of the year April 2016 Closed Undisclosed Advisor Shareholders September 2017 Closed Undisclosed Advisor Shareholders September 2017 Closed MBO of ECC Timber Ltd Fund Raising for a new SME Lending Vehicle Capital Raising for a National Retail Business MBO out of UK parent Capital Raising for Valuation Undisclosed Strategic Advisor July 2016 Closed 25m Project Beech Private Placement Agent December 2016 Closed Undisclosed Project Treaty Strategic Advisor Closed March 2017 Undisclosed Advisor to MBO team Closed June 2017 Undisclosed Strategic Advisor October 2016 Closed Company Valuation February 2016

35 CONTACT DETAILS John Bowe Mazars Ireland Harcourt Centre Block 3, Harcourt Road Dublin 2, Ireland Tel: +353 (01) Mazars is present in 5 continents.