Question 1

1. Core Activities

Accepted Answer

1. Technology Diligence & Optimization Plan:

Technology: We diligence the tech stack.  The engineering team (skills and cost).  We assess technical debt that is quantified.  We do an assessment of unquantified technical debt.  We perform a gap analysis to determine whether technology supports the commercial strategy being developed in parallel.  We create an analysis of which parts of the technology should be replaced, or shut down, to improve OPEX.
Product: We will spend a lot of time on the product roadmap.  This includes in-depth customer interviews about the product today and tomorrow (the roadmap).  We perform a gap analysis to determine where the Product supports the commercial strategy being developed.  We perform a gap analysis to determine where the Product sits in the market (you want to be buying or investing in mission-critical products that are best-in-class in this region (ANZ) or 2nd best with the ability to become best).

2. Cyber-security:

Diligence & remediation plan: These days, Cyber-security is it's only area of diligence.  This is all about mitigating risk.  A cyber-breach can be devestating and destroy share-holder value.  We will produce a report identifying cyber-preparedness and areas for remediation.

3. Commercial Diligence (GTM, S&M, pricing) and Optimization Plan:

Existing customers:  We will perform interviews with 5 randomly selected current customers to understanding their view on - 1) product criticality; 2) current pricing; 3) current functionality; 4) propensity to renew; 5) propensity to spend more (either because of price increases, or additional functionality modules being released)

💡 Pro tip: Get in touch via the form below to get our pro-tips on how to manage these calls and get gold out of them.

Pipeline customers: we will conduct phone interviews with 5 randomly selected opportunities from the sales pipeline.  We take the pipeline report and pick 5 big opportunities randomly.  Then get the Vendor to make introductions.

💡 Pro tip: Get in touch via the form below to get our pro-tips on how to manage these interviews and avoid pitfalls.

Industry experts & analysts: we will identify, approach, and interview 5 industry experts.  This will usually include: former executives who have left the Target Company (the inside view); executives that used to work for competitors of the Target Company (the competitive view); Gartner or Forrester Analysts for this category (the industry view); trade press (industry view #2).

4. People Diligence (Management team & teams beneath them) & Optimization plan:

Current team assessment: Who are they?  What are their core skills?

Functional skillset review: 1-on-1 interviews with all key functional areas, whether the current owners consider them as “key people” or not.  The functional heads of 1) Sales; 2) Marketing; 3) Customer Support; 4) R&D; 5) Product (if a separate function); 6) Infrastructure; 7) Security; 8) accounting & finance; 9) HR & culture.

💡 Pro tip: often the Company leadership say that many of those functions sit with some of the founders/owners.  Or that “there isn’t a head of Product” for example.  Or that the person that does that is junior.  It doesn’t matter.  We are going to interview the people that actually do the work described in 1 → 9, no matter their title or seniority.  In all software companies, someone is doing those 9 things, even if its not in their title.

Question 2

2. Outputs & Results

Accepted Answer

1. Investment committee Material:  We aim to find, vet, and serve-up one deal per month for your Investment Committee (IC) to look at.  This first look will be presented first with a 3 page analysis in early-vetting.  A second, 20-30 page analysis will be submitted along with a term-sheet 4-6 weeks later for final IC vote and decision to either a) move forward with deal; b) kill deal; c) get more information and prepare an IC3 presentation addressing key questions X, Y, Z.

2. NBIO: Between the two IC meetings described above, a non-binding indicative offer (NBIO) will be socialized with the vendors/owners to see if it is in the ball-park.

3. Exclusivity: Final step in the phase is to secure 90 day exclusivity with the vendor with a signed NBIO.

PHASES

Find potential deals:

1. Core Activities

2. Outputs & Results

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