value creation process - ljk · ultimate goal is to accelerate growth using the vcr as a guide....
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M&M Growth Partners
M&M GROWTH PARTNERS
Value Creation ProcessMatchTargeting entrepreneurial growth companies
Introduction to M&M Growth Partners An ICT focused Growth Capital evergreen fund
DevelopCo-develop with Owners, Board and Management
ProsperValue creation enabled
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M&M Growth Partners
IntroMEET OUR DEDICATED TEAM: WWW.MMGP.FI
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M&M Growth Partners
IntroSOME PORTFOLIO COMPANIES WWW.MMGP.FI
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M&M Growth Partners
Match
Entrepreneurship• Clear entrepreneurship or
otherwise balanced founding team
• Owners have a key operative role
• Serial entrepreneurs or family owned
We typically do not invest in• Seed stage companies• Companies with high technology risk• Hardware manufacturing• Companies requiring several future funding rounds to sustain
operations• Turnaround companies / scenarios• Blue ocean or red ocean scenarios with heavy capex
Growth• Team with ambition to
grow• Often but not necessarily
acquisitions assist organic growth
• Clear advantage in selected domains
Financial Position• Profitable• Low capital expenditure
requirements
Business Model• Significant sales• Both service and product
businesses• In product businesses: The
product is in or quickly reaching mature stage
• Category leader in the industry value chain
• Internal startups are ok
Industries• Focus in software/ICT• All ICT subsectors and also
across industries, such as health care, where ICT or digitalization plays a major role
• Special interest and expertise in Analytics, AI, Robotics, DevOps, Testing, Security and development tools.
OUR TARGET COMPANIES
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M&M Growth Partners
Develop
VALUE CREATION ENABLERS
VALUE CREATION DRIVERS
STRATEGYStrategy Execution: Board/ Governance, KPIs.
Revenue Growth Margin improvement Capital efficiency
HR Legal Finance IT systems Quality
DD ON VALUE CREATION
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M&M Growth Partners
DevelopVALUE CREATION PROCESS
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1. Linear (HC) Acceleration
2. Non-Linear (nonHC) Acceleration
4. Company GroupValue Creation
3. MultipleExpansion
= At Business Unit level= At Group level
2. Non-linear Acceleration:M&A and Partnerships. Serial Acquirer and Divestor. Increase bolt-on and using partnerships pre M&A to increase success rate of strategic fit.
3. Multiple Expansion:Increase the multiple w/ systematic focus on following axis: 1. Talent & thought leadership2. Client base & type of engagement3. International success4. Growth 5. Operational Excellence
1. Linear Acceleration:1. Clarity (OKR, BSC): Limit Number of KPIs.2. Action Plan: Rolling Quarter Plan (this Q, Next Q)
per BU, MWB). 3-year Roadmap.3. Incentives aligned w/ Company objective4. M&M GP Operations team’s hands-on support5. Go-2-market
4. Company Group level orchestrates Acceleration
Process and offers key parenting services, e.g., capital, recruitment, etc.
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M&M Growth Partners
Develop
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VALUE CREATION PROCESS
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M&M Growth Partners
Develop
1. LINEAR ACCELERATION: BOARD IMPACT ON VALUE CREATION
McKinsey: “The comments of the respondents suggest two key differences. First, nonexecutive directors of public companies are more focused on risk avoidance than on value creation (Exhibit 2). This attitude isn’t necessarily illogical: suchdirectors are not financially rewarded by a company’s success, and they may lose their hard-earned reputations if investors are disappointed. Second, our respondents noted a greater level of engagement by nonexecutive directors at PE-backed companies. The survey suggested that PE directors spend, on average, nearly three times as many days on their roles as do those at public companies (54 versus 19).”
There are some positive outlier Public Company Boards that have adopted PE methodologies and time/ effort spent, e.g., participating in MWBs with the Company Mgmt Team.
https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-voice-of-experience-public-versus-private-equity9
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M&M Growth Partners
Develop
1. LINEAR ACCELERATION: EXPECTATIONS OF PE IMPACT
https://www.bcg.com/de-de/publications/2013/leadership-talent-private-equity-ceo-partners-quest-value.aspx 10
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M&M Growth Partners
Develop2. NON LINEAR ACCELEARION: M&A PERFORMANCE
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M&M Growth Partners
Develop
2. NON-LINEAR ACCELEARION: FAILED ACQUISITIONS
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M&M Growth Partners
Develop4. PARENTING: ADDING OR DESTROYING VALUE?
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M&M Growth Partners
Develop
Company Specific Industry/Domain SpecificOpportunistic, Time Window
Based
Talent pool/mix, team
Capital efficiency, synergies
Market positioning
Transformational situations
Synergies
Trade sale, IPO market windows
Bidding situations
Product market fit, product gaps
Hype cycle positioning
Blue Ocean/Red Ocean situations
Category leadership
Windfall situations
SELL-SIDE VALUE DRIVERS
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M&M Growth Partners
Prosper
We live with our Portfolio Companies by sharing similar scenarios for long term development. As we are an evergreen investor there is no inherent need for exit or other major changes in the ownership. We are more than happy to share a long ownership with profitable quality companies in our portfolio.
Prosper together
The most important thing we want to share with our portfolio companies is the Value Creation Roadmap (VCR) with concrete measurable tangible milestones and actions to achieve them. We will form this plan together with the Company. Our ultimate goal is to accelerate growth using the VCR as a guide.
Common Goal
We appreciate mutual respect in everything we do. We are very active in supporting day to day operations as needed and agreed with the entrepreneurs/owners.
Culture and day to day working mode
PROSPER: THE COMMON GOAL