Successful Financing Transaction Considerations

Back to Tool Box

The following outline has been adapted from materials Franz von Bradsky has presented at numerous seminars and workshops.  It is not meant to be all inclusive but rather to highlight those areas that are most important to institutional investors in reaching their decision to invest in a company.

What is the nature of the opportunity?

  • Market size
  • Timing
  • Industry dynamics
  • Key value drivers

How is the company positioned relative to the opportunity?

  • Competitive position
  • Stage of growth
  • Ability to execute
  • Investors focus on the best of the best – those that will be the market leader

Is there should be a meaningful level of differentiation from the competition?

  • Management
  • Brand name
  • Product and/or service offerings with significant features or advantages
  • Proprietary processes and/or technology
  • Strategic partnerships
  • Intellectual property such as trademarks, patents, copyrights, logo, etc.
  • Differentiation creates a barrier to entry for existing and potential competition

Does key management have a demonstrable record of success?

  • Significant industry experience
  • Proven ability to execute
  • Successful track record with successful companies
  • Is the management team complete?

Are operational and financial processes/systems in place?

  • Systems and procedures must be able to support projected growth
  • Internal control system must support comprehensive information management
  • Financial and operational performance evaluation to take corrective action
  • Timely financial reporting – monthly reporting requisite
  • Provides support for an audit or review by an independent CPA firm

Strong Board of Directors and outside professional advisors

  • Well regarded – seasoned
  • Independent directors with industry experience
  • National or regional accounting firm
  • Legal counsel that specializes in corporate and securities transactions
  • Gives management support to focus on running the business

Is the business model and vision for the business well defined?

  • What are the goals the company has set for itself?
  • How will the company achieve those goals?
  • Milestones demonstrating successful execution should be identified
  • Is there a contingency plan for the unexpected?

Does the financial plan accurately reflect the company’s opportunity?

  • Investors will find any inconsistencies or weaknesses
  • Investors will only invest in a plan that is achievable
  • Attractive valuations flow to deliverable financial plans
  • Many financial plans have a “hockey stick” projection that is rarely achieved

Back to Tool Box