Management Team Due Diligence Training

Transcription

1 Management Team Due Diligence Training Chris Sackett BrownWinick Joe Leo BrownWinick Matt Kinley Equity Dynamics Mike Colwell

2 Welcome Sign in? Phones on silent? Where are the bathrooms? Introductions

3 Thank You Sponsors!

4 Agenda & Goal Agenda: Present a series of fictitious companies and management teams for discussion and review. Present a set of questions to vet the management team. Goal: Provide a basic knowledge of vetting a management team.

5 Tick-it Team: Three principals, Sherry, Ryan and Shelly Sherry, new college grad and band member. Has a knack for PR. Ryan, serial entrepreneur with a couple successful exits. Shelly, deep marketing experience, 1 st marketing hire at Google, left there as head of channel marketing. Company: Tick-it is an event ticketing platform that offers low service fees, additional revenue streams for bands / venues / organizations and gives full control to the customer over their event ticketing. Online platform. Revenue based on ticket sales Successful beta with limited traction Current Situation: Raising funds for national launch Has a solid platform that works

6 Tick-it Questions for team: CEO is very inexperienced What mentors and advisors does she currently turn to for guidance? Can she show past experience taking the advice of others over her own plan? Is she ready to step aside for a more experienced CEO? What is the plan for a CFO? Is this in the funds being raised? What is the plan for a operations manager to run the day-to-day? Is this in the funds being raised? Experience in marketing and sales: Does Shelly have the experience necessary to grow a company brand from zero? Is Shelly committed long term to the company Ryan is a serial entrepreneur, what level and duration of commitment does he have to this company? What is the plan to transition the day to day work of Ryan to a staff position?

7 Jackson Engineering Team: Jim Jackson 20 years of engineering experience in Caterpillar Corp. Lead engineer on major new product development projects s that resulted in market successful products. Company: Jackson Engineering Started 12 years ago Launched his own company starting 12 years ago to do engineering consulting. Started developing and marketing his own products into the construction machinery industry. Awarded two rounds of SBIR funding ($750K total) to develop a new method for pumping hydraulic fluid in a non linear use machine. The award was based on saving fuel usage Current situation: Raising money for taking a new industrial hydraulic pump to market based on a successful beta test of his SBIR project outcome (high interest from market) Currently is the only manager of the company. Uses outsourced Legal, Accounting, and procurement services Wants to build the product in Iowa in an existing facility.

8 Jackson Engineering Questions for Jim: Management of personnel. Has he managed outside of engineering. Financial management experience Marketing and market launch experience Experience in marketing and sales Has he managed sales people directly. What is his view on marketing of the product Past commitment to IP developed for Caterpillar Does he have a clean departure from Caterpillar when it comes to IP? Did he file any IP at Caterpillar around Hydraulics? What is his plan for building out the team. What are the key hires in what order. Is the money for these hires in the proposed funding raise. What areas will he outsource at what cost What is plan for the CEO role short term and long term What team will need to be in place at the exit.

9 PayManageSoftware Team: Mike Simpson 30 plus years experience as a mechanical engineer. Company: PayManageSoftware / Simpson Engineering Launched his own company starting 20 years ago to do custom engineering consulting. Started PayManagefrom a custom software project he developed for a local school system Has self funded and raised capital in the past. Current situation: Raising money to take PayManagenational. Currently is one of only two employees of the company. Uses outsourced Legal, Accounting, and procurement services. Product is installed in about 10 customers running successfully

10 PayManageSoftware Questions for Mike: Building the management team: Does Mike plan to run the company? Does he have a person in mind to run the company? Technical support for product. Given the tight market for talent, how will Mike staff the key positions needed to bring development and support in house? What is the plan to hire a sales manager and sales people? Support for product Is the current support person capable of managing support as it grows? As the majority of the team needs to be hired: Are the funds in the amount raised to hire these people? Does Mike have a plan to quickly bring a team into place once the funds are available?

11 Considerations in vetting a management team Is there an experienced CEO? Is the sales lead experienced in the correct field, do they bring contacts to the table? Does the marketing lead have a clear plan with metrics for managing the lead to customer conversion process? Do they understand the process for this industry? Have the key members of the team managed people in the past? Have the key members build new teams in the past? What level of financial experience does the team have? Is there a credible CFO in the mix?

12 Considerations in vetting a management team Are all members citizens of the US? Have background checks done on all members of the management team? Do any of the management team have legal commitments to other companies, Non-compete, Patent assignment or restriction? Check references of all members of the management team? Customer reference checks. Make sure you have some customers not recommended by company.

13 Summary Key Points Questions?

14 Thank You!