An Inside Look into Private Equity Firms

capital_investment1Often in the AceTech Community, we hear CEOs discussing avenues for acquiring additional capital.  One of the common ways this is done is through Private Equity firms.  So, we thought we would get the inside scoop into a private equity firm and hear about their role from their perspective.

Yong Kwon, Partner at Novacap and AceTech Ontario sponsor, sat down with us to give us the inside track as to what they’re looking for and what advice they have for companies looking to acquire capital.

Before you even look at which private equity firm you want to partner with, unless you’re planning on outright selling your company, you need a detailed plan of what it is that you want to gain out of the partnership.  Knowing what direction you’re looking to take the company with this equity will help you better determine which firm is right for your company.  “Do existing shareholders want to take some cash off the table?  How much capital is needed to grow the business, either organically or through M&A?  How and in what time horizon are shareholders planning to exit?”  These are just a few of the important questions founders and management should consider, explains Yong.

It’s also important to know what you want the firm’s involvement to be, especially as not all firms take the same stance with regards to their participation.  Novacap, for instance, takes a very hands-on, operationally- focused role.  This is because they have partners who have formally been c-level executives and who don’t just have a financial background.  However, many other firms are not as hands on.

Of course, track record is also very important.  What is the PE firm’s history and reputation investing in your sector?  Yong suggests asking colleagues or industry peers about their experiences dealing with specific PE firms and the people within those firms.  Many will have impressive backgrounds and past results they can point to, but ultimately you will want to feel comfortable that the people who are partnering with.  How much attention will you get from your PE partner and how important is your success to their overall portfolio?

There’s a common misconception entrepreneurs have about private equity firms – that they’re all the same.  They are not. Partnering with a PE firm is a long-term commitment and finding the right fit is critical.  Taking the time to do your research into all the different options available will help you ensure you find the right partnership between your company and a private equity firm.

 

 

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It’s About Time: Marketing for The Complex Sale

Contribution by Waylen Miki, Content Marketing Specialist at AceTech Ontario member company TripSpark Technologies

Despite what the play/film Glengarry Glen Ross may suggest, not all sales happen overnight. And the old adage of “Always Be Closing” falls on deaf ears when you’re dealing with a client who may not be able to buy from you many years down the road. In the transit software industry, one of the reasons for this stall in the sales cycle is due to long pauses between national funding events. This means our sales and marketing teams are forced to re-think their approach when it comes to lead nurturing and engaging with these unique clients.

But as luck would have it, the complex sale provides you with some valuable opportunities. When confronted with the longer sales cycle, you can use this time wisely. And since no sale exists within a bubble, your efforts can reach beyond the single sale and become the backbone of an entire inbound-style marketing strategy.

You Can Provide Value Before and Beyond the Sale

The key to the inbound method is to provide quality, useful and valuable information to your industry (read prospects). Your potential clients are searching for any information that can help them with their specific problems. And since you are also an expert in the industry, you can help them out. What are the trends in your industry that are of most concern to your prospects? Is there any leading research, papers, studies, that are being conducted that can help your prospects to better manage their business? Can your company be responsible for creating these studies? By keeping your eyes open to useful resources and distributing them to your potential clients, you become a central repository of knowledge.

How Transit Software Vendors Deal with Long Cycles

In the transit software industry, grants and funding sources play a major role in our sales relationship. We have found that it’s vital to help assist with budgeting in order to ensure that the acquisition price is within our prospects’ budget and purchase timeline. By working with clients through the RFP and RFI process, we are able to have more control over our sales plan and the methodology for ensuring that our products are the best fit at the best time. Our job is to help our potential clients as much as possible, making the purchasing process as painless as possible.

Do More With Your Content

Don’t simply assume your leads are the only ones in need of this material. Take advantage of your knowledge and create content for everyone in your industry. Write your own whitepapers, eBooks and blog posts and build your credibility as a thought leader. With regards to the complex sale, you are delivering value, long before a sales discussion. It is this growing relationship that will matter when the time comes. As well, after the sale is complete, you can continue to provide insight into your client’s operation. By working with clients, rather than simply selling them your product, you take on a dynamic role within the success of their operation.

Reveal Your Past and Current Success

Speaking of success. If you have reference sites that can validate and provide an honest and positive review of your product or company, share that with the world. If you have been nurturing your leads (now clients and advocates) over the past year, reveal the success that you and your partners have found, especially to your clients Remember that they are the hero of their story, not you. This point of view is incredibly valuable when new prospects begin to consider your company as a partner. We have found that video testimonials are very well received by both our clients as well as evidence by the traffic on our website. So we suggest taking advantage of video marketing. As well, be ready to provide client references as well as credible ROI analysis.

Beware Targeting a Single Employee

It can be an annoying thing to be in the middle of a year-long relationship with a potential client when suddenly your key contact up and quits from the company. Suddenly, all those lead nurturing emails and late night phone calls are rendered useless. This is why it’s important to nurture leads in more than one way. If your sale is going to be complex, then so should your approach. Rather than simply engaging one-on-one with a particular contact, there are ways to begin engaging with the company as a whole. Consider approaching others at your target company to work with you on a mutually beneficial project. This can be a co-created whitepaper that can provide value to the industry as a whole. Perhaps you have an idea for a webinar that can be enhanced by the experience and thought leadership of your target company’s leaders. This is a great opportunity to begin a creative and business relationship that does three important things:

  1. It establishes professional contact between you and your lead.
  2. It provides their company with a valuable piece of content, free of charge.
  3. It provides your company with deeper credibility with your own clients and all future prospects.

As transit software vendors, it is fairly simple to work within our industry to come up with quality content. Not every industry is as passionate about expressing the relationship between efficient transit service and the need for automated transit software.

Learn the Needs of Your Leads

We run into our prospective leads at tradeshows featuring transit software and hardware vendors. Maybe you’ll encounter your leads at symposiums, in online chat forums, social media outlets. Perhaps you’ll visit them in person at their site of business. In all these places, you have an opportunity to learn more about the needs of your leads. Rather than simply trying to force your logo, your brand and your product into their line of sight, consider asking them questions instead. Take the time to discover what pain points are the most relevant to their business. Uncover problems that they may be encountering for which you have a solution.

In the end, it’s not about selling, it’s about giving. So what do you have to offer? If you don’t know, find out. Along the way, you’ll find incredibly valuable insight that can be used for incredibly valuable marketing content. So by the time you think you’re at the “Always Be Closing” stage of the sales cycle, you will realize that you have already surpassed it.

Hire Slow, Fire Fast

we-are-hiring.png“Interviewing is like dating”, says Colin Dickinson, CEO of Altus Dynamics and AceTech Ontario CEO member, “anyone can fake their way through the first date, but the real test is if you can make it to the third date, and let’s face it, the really good stuff happens on the third date”.

Altus Dynamics was recently pleased and honoured to be awarded the number five Best Small Workplace in Canada (up to 50 employees).  We had a chance to sit down with Colin and talk about Altus Dynamics’ “secret sauce”.  Ultimately, there’s a handful of factors that makes his company stand out from the crowd, however, he attributes a considerable amount of their success to their ability to find the right people.

“We are in a war for talent.  I’m certain that everyone in my position who’s a part of AceTech Ontario understands this”, says Colin, “If you can get better people, that is the number one way that you can be better than everyone else. In fact, probably the only sustainable advantage today is to have good people”.  As a result of this, Colin has spent the last 13 years perfecting their hiring process and having a corporate culture that fits their business.  Colin ensures that his employees are not simply punching a clock in and out, but are bringing their full selves to work every single day.

A number of years ago, Colin read an article on knowledge work in Harvard Business Review that stated that a high performing knowledge worker is seven (!) times more productive than his or her intermediate co worker.  This statistic has motivated Colin and his executive team to find those high performing knowledge workers who fit with Altus Dynamics’ corporate culture.  Throughout the years, they have been able to greatly improve their hiring process and ensure that they take their time with each hire that they make.  Colin has learned to avoid getting “happy eyes”.

What are “happy eyes”?  In sales, there’s a term called “happy ears” where a prospect might tell a salesperson that they are seriously considering their product or service.  Some salespeople will take that at face value without realizing that they are getting brushed aside.  When hiring, “happy eyes” happens when a company will look at a CV, see what they want to see, become enamored and not look beyond that.  This is why Altus Dynamics has a very involved hiring process.  “Google has a great approach where they involve a lot of people in their hiring process, which we do as well”, explains Colin, “Everyone has a vote, up or down and if one person has a down vote, we are no longer interested in that candidate. Google’s perspective is on this is that they would rather forgo good talent then hire bad talent”.

Lastly, Colin stresses that finding the right fit is a two-way street.  When interviewing, Altus encourages candidates to ask them difficult questions.  This is because ultimately at the end of the day, despite having a strong candidate in mind, if your company does not have the culture they are looking for or the job is not the direction they are looking to take their career, this will also result in them not being the right fit for your company, and neither of you will be happy or engaged.

As a number of mentors have shared these words with Colin – and as these words have been famously spoken throughout AceTech Ontario – “I’ve made all the mistakes, so you don’t have to”.