Rather than my smart-ass advice, they really needed money

After 15 years working in the IT&T sector in Australia, Hong Kong and New York I retired in 1989 to my mountain farm to contemplate my future after corporate life. This didn’t last long as boredom set in and I missed my daily adrenaline rush of emails from all over the world (a proprietary system back then before the Internet). A Fax machine just didn’t cut it.

Soon I was lured into corporate advisory work by colleagues and contemplated “what did I really have to offer”, particularly to young tech entrepreneurs. I thought my experience in managing a rapidly growing IT&T company and becoming listed on the New York stock exchange, would resonate.

But what I quickly discovered was, rather than my smart-ass advice, they
really needed money to grow their fledgling companies.

Thus, began my journey into investment banking (not that I knew this was what it was called at the time). I had started in Data Processing (DP) in the 1970’s, ended up in IT&T and was now contemplating a career in the world of finance, stock broking and investment banking. Because of my experience in systems, business analysis and the extensive processes of the IT&T business, I set out to discover what was used in investment banking. Much to my surprise I discovered that the tools financial analysts used were pretty basic from my perspective and focused on analyzing past performance, rather than assessing and measuring the key factors that would make a company successful in the future.

Analyzing a company’s last 5 years of financials, ratio analysis, free cash flow models, measuring the future market demand for their products, assessing the competitiveness of their offering and the capacity of the management team to execute successfully, was all well and good, but didn’t meet my need for empirical measurements that could more accurately predict future performance.

Around this time we hired a few experienced guys from the big investment banking firms, hoping to learn more about their processes and analysis tools.

While their financial analysis skills were well honed, their knowledge of what makes a business successful was very limited. We learnt was that these large firms depended on a small number of very talented deal makers who did indeed understand what made business “tic”.

Underneath them was an army of analysts and mangers fulfilling various parts of the execution process, but who did not understand the “whole story”.

These people while highly skilled were not particularly useful to us, and of course the really talented people wouldn’t leave a lucrative career to join a maverick firm like ours.

We therefore determined to build our own investment bankers.

How did we do this?

To do this we had to first document what we believed made businesses successful and also develop the supporting processes to help them prepare for raising capital or an M&A transaction to achieve maximum value.

We started with a guide to writing a comprehensive business plan. What were the key elements that needed to be covered to ensure success? This Guide has now been used by hundreds of companies across a variety of sectors.

We then moved onto detailed documentation for the Capital Raising process, M&A, IPO’s and AFSL compliance manuals.

We also built a comprehensive analysis tool to predict future performance consisting of 100 points of measurement. The main Categories are:

 Market Opportunity
 Management Team
 Products & Services
 Marketing, Sales & Distribution
 Strategic Issue & Board
 Financial Analysis
 Customer Profile & Analysis
 Investment Factors
 Production & Delivery
 Industry & Macro Environment.

This tool became our standard first up assessment of any new opportunity and it was also used for selecting a short list of companies to be selected for a Silicone Valley Mission run by Austrade.