Familiarity May Breed Complacency
Investors do not expect everything to go according to plan, so they expect to see:
• risk areas and uncertainties identified
• plans to avoid potential problems, or to minimise their impact
• contingency plans if problems do occur
• sensitivity analysis to answer 'what if' questions
The presentation of the document should be professional, attractive and readable, it should be bound effectively, and there should be an index. Published material such as product literature and press comment should be included in an appendix.
The temptation to go into too much detail, resulting in too long a document, must be avoided. The first page of the plan should give a one-page executive summary of the entire proposal. All this may sound like common sense, but basic errors are often made. There may be no executive summary, the size of investment required may not even be mentioned, and duplicated copies of published material may be difficult to read.
The content of the plan should include:
• Executive summary, a single page which tells the prospective investor in outline everything he needs to know to decide whether he could be interested or not
• The company history, present ownership, location, key products and services, suitability for a buy-out or buy-in, commercial rationale for making the proposed investment
• The market place, marketing and selling
the size of the market place and forecast growth competition and a comparative assessment of products and services in terms of performance and pricing
major customers and distributors
marketing, selling and sales-promotion plans
Where appropriate, published sources of information should be quoted to support estimates and forecast growth of the market segment. Comparative product performance could be supported by reprints from test reports published in consumer magazines and the trade press. Such reprints should be included in an appendix.
• Manufacturing and distribution / land and buildings / production facilities / use of latest technology / surplus capacity / need for additional capital investment / key suppliers and subcontractors warehousing and distribution
• Technical current and proposed R&D projects, patents, licences and trademarks, anticipated technological developments within the industry and the planned response. People, members of the buy-out team organisational structure other key employees and expertise headcount analysis by department employee relations and trade unions
Financial summary
estimated purchase price and expenses
anticipated time to realise the investment and likely exit routes
working-capital requirements
historical and forecast profit and loss accounts and cash-flow figures, covering the next 3 years
budgeting, monthly-reporting and financial-management proce
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