Thinking of investing as a partner in a business? How can you be confident that you’ll get the relationship and returns you’re looking for?
The competition for great low- to mid-market investment deals is intense, and winning and closing the deal is just the beginning. When your focus is on ensuring a long-term return on investment, two critical questions need answering:
- “With some additional support/capital, does the current owner have what it takes to grow the business?”
- “Is the owner open to change and doing business differently?
Not all owners are capable of making the necessary change – but the good news is that the associated behaviors are measurable and can be managed.
“Investment bankers, people acquiring entrepreneurial businesses, or individuals who work for an entrepreneur – anyone who deals with an entrepreneur – would do well to heed the complex drama playing in the inner world of these people; they will profit by looking beyond the surface of things.”
– Kets de Vries, INSEAD
Orange Kiwi provides measurable insights to support your investment decision-making, which can lead to:
- Risk reductions. Our approach and proprietary assessment tool reduce the guesswork on whether an owner is going to be a good future partner
- Win-rate increases. Using our methodologies early in the deal flow will provide valuable insights into what the current owner needs to close the deal
- Return maximization. The quality of the working partnership post-deal can make all the difference in ROI. Where the deal results in an ongoing partnership, our insights maximize the potential of a successful working relationship
- Deal flow. As a result of relationships with large institutional advisors to owners, and successful entrepreneurs themselves, we help bring a steady stream of businesses and owners to the point of selling all or part of their business.
We understand that investing is often a race against both the clock and other competitors. Hence, we have designed our approach to be cost effective and efficient. In fact, an initial owner assessment can be completed online within 15-minutes.
Our solutions include:
- Assessment & evaluation. Our online psychometric tool covers the key characteristics required of a business owner for a successful transition and partnership. You can either access it through a contract with us or license the technology and integrate it with your sourcing/due diligence processes.
- Consulting. Many business owners need help adjusting to their “new reality” as a partner. With our expert knowledge of entrepreneurial behavior and business growth challenges, we can help ensure that the partnership succeeds. We do this by working with the original business owner, management team, and investors using a wide range of proven change management and organizational development tools and interventions to prevent or solve post deal challenges.
“Richard” seemed to be an ideal partner. He’d grown his transportation business from one vehicle to more than 500 and there was room for further growth. Based on this, a private equity (PE) firm invested both financial and human capital into the business, including a new IT system to enable greater efficiencies.
Disappointingly, Richard refused to embrace the changes and he wasn’t readily replaceable. In fact, Richard was not only important to the PE firm’s growth strategy, but he is a key component of its exit strategy.
We were asked to evaluate Richard’s unexpected behavior and within a few minutes we’d identified how and why he’d resisted the new IT solution:
- He had a high need for originality – big ideas needed to be his
- He had a high need for competency – he needed to feel confident, successful and in control of his world
- He was an adaptive problem-solver – he didn’t like a lot of rapid change.
Fortunately the evaluation revealed some opportunities to prepare Richard for change in the following 12 months, so that he, the business, and the PE firm would be best positioned for successfully achieving their joint and individual goals for the deal.