Communicating a Compelling Investment Case

Good communication is vitally important in today’s highly competitive business environment. The success or failure of a sale of a portfolio company is frequently based upon the clarity and persuasiveness of the story and upon a positive impression created by those key people who put it across to potential investors or buyers. The chances of achieving either of these are reduced by a preparation process that focuses on a slide pack, or on a structure full of background and general description.

During the preparation for a recent portfolio sale, a client produced a draft management presentation for prospective buyers built around a huge slide pack. It contained over 120 slides of data-heavy information! During the initial run-through of the presentation those slides were the focus of attention at the centre of the room, with the management team merely ‘narrators’ and off to one side.

In preparation for a similar transaction, another client was advised by its bankers that the agenda for the presentation should cover firstly company overview and history, then market overview, then strategy, financials and so on. All contained valid points for communication, but the presentation was simply a ‘slimmed-down’ version of the Information Memorandum that the prospective buyers had already seen.

So, how should the management team communicate a clear investment proposition and convey the right impression? The answer lies in the preparation.

Draft the presentation outside of PowerPoint

Start drafting the presentation structure on paper, or as a Word document, or, even better, use a software product called KeyPrep. This ensures focus on the key messages to be communicated by the management team, not what needs to be displayed visually. Ultimately this document can be distilled into bullet-point speakers’ notes, or ‘fleshed out’ into a full script where required.

Drawing the distinction between what the management team say, using some notes to keep them on track, and what they display visually, will help ensure that management leads, not the visuals. They’ll create a more positive impression if they’re seen to lead the show and tell the story, with any slides playing a supporting role as evidence. 

Structure around the investment proposal

If you want to convince the investor that it’s worth investing in a company, build your story around the reasons why, not around a lot of background material that let’s the investors draw their own conclusions. 

It’s no different to persuading a couple of friends to go to the gym with you.  You’d tell them what’s in it for them, not the history of the gym or recent trends in health and fitness!  So, rather than focussing the investor presentation on an overview of the company, or its strategy, instead, build the story around the key points of the investment case. In that way, you’ll guide the thoughts of the investor and any questions will be targeted to fill in the gaps. 

Differentiate between slides and the handout

Having drafted the content of the presentation, only then decide what slides are necessary to prove a point, illustrate a trend, or visually reinforce a key message.  Finally, decide what the handout should contain. This could be just a printout of the slides, but usually needs to be more comprehensive because it might need to make sense when read in isolation. Clearly these decisions can be influenced by the regulatory regime, so flexibility is required.

Story first, slides later

So, if you want to help ensure a higher price on exit, don’t dive into PowerPoint for the management presentation. Get the story right first. The investor will get a positive impression of the management team who lead the show, prompted by a set of notes, not from the slides, and the investment proposition will be clear and convincing.