The client is a SaaS company with a turnover of just under £2 million supplying specialist software and services to a sector of the financial services industry that is highly regulated. They have a mature, well-tried and trusted product supplied to a number of prestigious clients.
They have over the last few years invested in the development of a new cloud based associated product that has significant competitive advantage over the competition. The impact of developing this product has contributed to the company losing just over £100k for each of the last three years.
They approached Avondale to help them raise finance to support the launch of the new product and to provide additional liquidity. After reviewing the company’s current situation Avondale’s conclusion was that it would be difficult and costly to raise the finance needed.
Avondale and the client agreed that the best way forward was to conduct a full strategic business review. Avondale conducted the strategic Business Review involving both the shareholders/Directors and senior management of the client.
The output was a strategy workshop held with the two main shareholders/Directors to discuss the findings/recommendations and agree the optimum way forward. The key findings were:
- A number of areas of the business were identified that investors would consider risky.
- The company was not adopting best practice in all areas.
- A number of ways to address these concerns were identified.
- Investment in Sales and Marketing needed to be increased significantly
- Through a combination of restructuring and outsourcing Avondale identified annual cost savings of between £350 and 500K depending on the route chosen.
- Additional Sales and Marketing costs would be less than this.
Avondale outlined key action steps in order to address these points and maximise the potential of the new product. This strategic plan results in:
- The company being highly attractive to investors.
- Making it much easier and cheaper to raise the funding.
- The company increasing its equity valuation by 500% in 3 years.