Investment Partner Strategy

Telecommunications

10 Nov

Summary

Deecon were engaged by DELTEQ / COMTEQ to lead their Investment Partner Strategy. This process included defining the investment case and strategy, researching potential investors, and completing due diligence on investment options to find the optimal target investors.

The Requirement

Deecon were entrusted to lead DELTEQ and COMTEQ’s investment partner strategy follow a three-month due diligence engagement on the companies.

The investment case had been defined in the previous engagement. DELTEQ and COMTEQ (the Group) experienced high revenue growth over the previous three years and were targeting further expansion within the telecoms market and external markets such as Electric Vehicles (EV). The Group formed a new company called ‘EVlution’, aimed at end-to-end EV charging solutions and looked to raise capital by securing third-party equity investment.

The Solution

The first stage was to align their criteria for an investment partner. This included discussions around the amount of investment they were looking for, potential future management structures, and the purpose of investment.

Deecon compiled a long-list of potential investors to research based on these discussions. This included Private Equity firms, Venture Capital firms, and Industry Investors.

Deecon developed a three-stage assessment to funnel the long-list of potential investors down to a target list. The strategy we developed is outlined below.

Stage One:

The first stage of the criteria assessed:

Investment – What sectors does the investor typically invest into?
Portfolio – What is the investor’s current portfolio?
Life stage – Where in a company’s life cycle does the investor typically look to invest?
Location – Where does the investor operate / target?
Size – What size company does the investor currently invest in?
Runway – What potential does the investor have for further future investment?
Activity – Is the investor currently active in the market?

Each potential investor was assigned a score between 1-5 dependent on fit to the Group’s specifications for each of the criteria listed. 5 implied a strong fit between the investor’s actions and the specifications, whilst 1 meant that it was not a fit. Investors had to pass a minimum threshold of 20 to reach Stage 2.

Stage Two:

Potential investors that passed Stage 1 were then assessed on the following criteria:

Approach – How does the investor tend to treat its portfolio companies?
Knowledge – What knowledge does the investor have of the Group’s industry?
Portfolio Compatibility – What is the investor’s current network?

This enabled us to further refine the list and identify 8 target investors.

Stage Three:

Deecon completed in depth due diligence on the 8 target investors that were identified. The criteria set asked:

Management – How does the investor interact as a board member to its portfolio companies?
Strategy – What are the investor’s future plans?

This funnelling strategy enabled Deecon to identify targeted potential investors who fit with the Group’s specification. The three-stage strategy prioritised researching information that was critical and easily identifiable first, such as the sectors a PE firm invests in. This enabled us to quickly refine the long-list. Additionally, the team worked in parallel to identify targets efficiently. Stage 2 research was completed as Stage 1 continued.

Following this, Deecon produced three detailed reports on key target investors. These reports included an analysis of the investor’s management, values, portfolio success, financials and realised portfolio.