Five Minutes with a Seller

Larato sat down with a seller to find out what they wanted from an investor, which aspects of the process were most challenging and how timely access to the right data played a part in their decision making.

What did you want from an investor?

We wanted an organisation with, as far as possible, a proven track record in our general space, which is broadly technology. From PE Houses we were looking for board level support and acquisition expertise.

What were the most challenging aspects of the investment process?

Due diligence is a necessary evil, but some investors were so demanding, that they detracted our attention from the business. One investor used a very strong set of advisors with vast experience in due diligence. This consumed a huge amount our of resource to answer all their subsequent questions. We were able to deal with that through strict allocation of tasks but it would have made more sense to allow us to concentrate more on the business.

It would be better if investors identified if the opportunity was the right fit for them before they asked founders to undertake extensive work.

Did anything put you off any investors?

The initial offer document from one organisation was inconsistent in its format so looked messy. Compared to the others, it was vague in what was being offered. They could have been great but that wasn’t made clear.

Did you feel that a lack of data either on your or the investor’s part delayed (or ever threatened) the purchase?

Yes, delays occurred and could have threatened the purchase. We mitigated the threat by addressing perceived issues quickly and clarifying where data was needed. Luckily, we could get hold of it.

Some advisors clearly misunderstand the opportunity due to poor knowledge of the space. Luckily for us, we had the data to prove that our opportunity was significant and real.

Why did you choose your specific investors?

The investors we chose were more flexible about when they wanted their money out, making us feel more comfortable and in control during a high stress time. That’s how they won the deal in the end.

We chose an investor who did a lot of their own due diligence so the questions they had for us were simple and light. It was a massive relief to just be able to get on with running the business whilst they made their own enquiries.

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