"Psion accompanies its clients from productivity improvement through business growth to value extraction" sitemap

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Business Life Cycle

Every successful business follows a lifecycle - it starts, grows, matures and ultimately, it transfers to new owners. We understand the needs of a business at every stage of its lifecycle. By keeping abreast of your evolving needs, we can develop financial solutions to help you grow and realise wealth.

Select any of the business considerations below to learn how we can help your business throughout its lifecycle.

consultancy tool box
Psion makes use of a constantly up-dated tool box of consulting products
Investment Thesis Productivity Improvement Business Growth Value Extraction
 
Due diligence

Diligence requires a thorough understanding of the business and the role the business fulfills in the value chain. Psion Partners takes a custom approach to each due diligence process. Some of the areas that can be covered are:

  • Indentifying the key industry drivers and hence those that will potentially generate the greatest value in the business going forward. Applying sensitivity scenarios to determine their overall effects on the returns expected at exit
  • Cash flow analysis to ensure the company is sufficiently funded going forward
  • Customer references to validate sales prospects

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Financial modelling


Financial model selection can have the most far reaching implications. Potential investors, founders and management see the model from different perspectives and with different motivations. Psion Partners can build or validate a detailed financial model, challenge or confirm the assumptions in the model and provide a judgement about the strengths of the approach, applying scenario sensitivity. Psion Partners provides an independent external viewpoint and helps develop an investment model to evaluate the risks of the investment.


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Benchmarking

benchmarking triangle showing the drive for change in the organisation to achieve excellence

Driving change in the organization through analysis of cost gaps to achieve world class performance

To close this gap several steps can be undertaken such as:

  • - a re-design of processes that are purposely implemented to achieve a significant increase in competitiveness
  • optimizing organisation-wide processes such as purchasing (fixed costs and bundling of procurement)

Usually a post-Benchmarking internal project team is assigned the task of implementing the efficiency improvement measures from the benchmarking team so that the key learnings percolate through to the whole organization.


Benchmarking with competitors is more complex than simply examining rudimentary performance data. It normally involves company members in a small team undertaking a success critical evaluation of competitors, the market, customer satisfaction, internal business processes, reverse engineering and purchasing. This entails pre-researched interviews with competitors and customers. Industry independent Best of Best operational processes of global companies are compared with those of the company under investigation.
This commonly results in a cost gap being identified.


Moving to new levels of productivity through implementation of key learnings from the Benchmarking project
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Time Based Management

TBM is used to increase the effectiveness and reduce costs in for example large projects. Project duration can vary but typically from conception through to implementation and controlling could be up to 1.5 years.

Some of the key outputs are:

  • Introduction of project orientated processes (Project Handbook) for both the tender- and realization phases. This includes the following elements: project information systems, tender controlling, calculation methods and tools, project handover document, project organization, project start, planning and control, change management, quality management, claim management etc.
  • Continuous improvement processes established so that new ideas and essentials, after close examination, can be implemented fast.
  • Hands-on implementation, during an initial pilot phase of the new / refined processes e.g. monthly, measureable project reporting introduced. On successful completion of the pilot phase, the systems are rolled out across the entire company.

Perceptible results achieved through use of these newly crafted tools are for example better Return on Sales (ROS) and a significant acceleration of the delivery period of projects, sometimes halving traditional performance



Through improved Project Management processes, project sizes increase and costs and delivery times are reduced


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Market positioning and tactical revenue

Collaborative development with client of :

  1. market sizing and
  2. penetration scenarios

to optimize strategy, positioning and resource allocation in relation to present and prospective market conditions

Help management work through the tactical and strategic activities to move from initial traction to sustainable market momentum. Psion Partners can help find the right balance between short-term tactical needs and the longer-term strategic requirements by delivering sales opportunities and sales management


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Value mapping and value chain evaluation

As part of the exercise to find :

  1. a possible M&A acquisition target or
  2. to determine company focus and core competencies,

value chain and customer expectation mapping can be very helpful in understanding where value can be created to increase top as well as bottom line growth. Below are examples from a past project

Project Examples

Value mapping diagram comparing 3 telecom companies in country "X"

Value attributesLowMediumHigh

National / International SMS availability

Roaming availability

National coverage

Quality of customer handling at point of sale

Reserved telephone number (pre-paid)

Price attractiveness

Quality of signal

Identification with the brand

Call-centre availability*

Quality of customer service at call-centre*

Accuracy of billing (post-paid)

Handling of claims

*No data available for company C  company A company B  company C

The diagram on the right shows the value line for the 3 companies

The diagram below shows the telecoms provider value chain analysis

Currency
Unit
657 339 347 524 605 617 280 1,392 909 458 -1,129
% 13.2 6.8 6.9 10.5 12.1 12.4 5.6 27.8 18.2 9.2 -22.6

Typical customer prepaid card: currency unit 5,000


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Portfolio evaluation and future direction

A company needs to re-evaluate its position on a regular basis to determine where portfolio investments are most effective and in line with the broader interests of the wider group.

Decisions need to be taken to prioritise drives within the company to establish:

  1. the most promising areas,
  2. relative achievable competitive advantage,
  3. strategic fit and importance

Through this exercise missing product offerings and targeted resource planning result.

Development of guiding principles

guiding principles for future direction

Develop guiding principles / strategy to decide on a company's future core direction

Uniqueness portfolio

product portfolio uniqueness

Determination of your present product portfolio uniqueness to allocate resources to Business Segments (BS) appropriately


Project Examples

leisure image

Below are examples of an investment house making sense of its existing portfolio of wellness companies and looking for the next logical investment


Executive Leisure Value Chain

leisure value chain

Determination of the complete value chain to identify gaps that need filling through organic or M&A growth (yellow arrows indicate the segments of the value chain that this customer needed to improve or expand its offering). Through adjusting their product offering and allocating resources intelligently, this customer was able to increase its product offering along the value chain at little additional cost.



Beauty & Aesthetics Industry Value Chain

beauty & aesthetics Industry value chain

Determination of the complete value chain to identify gaps that need filling through organic or M&A growth (yellow arrows indicate the segments of the value chain that this customer needed to improve or expand its offering). Through intelligently integrating these product offering and allowing cross-selling between companies, the high end customer base was offered a multitude of services hence increasing customer loyalty at little additional cost to all organisations involved held by the same investment house.


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Strategy review

Companies should engage in strategy review processes on a regular basis. Strategy review processes usually evaluate the strategic alternatives that may be available to maximize value for the Company and its shareholders

The strategic review could encompass a careful assessment of:

  • the Company's business plan, growth strategy and market valuation, including the potential sale of non-core businesses or assets
  • the optimal capital structure / recapitalization of the Company
  • the sale of the Company or its businesses
  • an analysis of the views of key internal and external stakeholders about issues affecting itsí services
  • an analysis of geographical expansion opportunities with tangible targets

An example of some of the areas that were covered in previous projects can be seen below. Click on the images below to load the full size diagrams in a pop up window.

Project Examples

Testing strategy content


click to load full size strategy content test diagram in pop up window

Geographical expansion


click to load full size geographical expansion diagram in pop up window
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SWOT analysis

This tool is used to complement research and expert interviews and quickly assesses the strengths and weaknesses of a business. It facilitates the identification of measures required to improve a business' market position. This could lead to a whole series of different but targeted projects to gain a better understanding of how to mitigate weaknesses and play more to strengths

Examples of the SWOT analysis tool in use in previous projects can be seen below. Click on the images below to load the full size diagrams in a pop up window.

Porter's "Five Forces" Analysis of Industry Structure: What puts pressure on profits for the Executive Leisure Value Chain - Company 1


click to load full size Porter's 5 forces diagram for Company1 in pop up window

Porter's "Five Forces" Analysis of Industry Structure: What puts pressure on profits for the Wellness industry - Company 5


click to load full size Porter's 5 forces diagram for Company5 in pop up window
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Merger & Acquisition (M&A) process

In order for a company to grow beyond its organic potential, a company at certain points in its growth needs to consider buying complementary bolt-on businesses. This process can be fraught with difficulty and therefore engaging the assistance of an experienced external impartial party can be very beneficial, saving time spent climbing the learning curve. Psion Partners has tools in place to give the systematic support required (see below). Some areas that need consideration are:

  • Company strategic options for enlarging upon or complementing areas of the company's value chain through a merger.
    What geographic reach does the target for acquisition need to possess ?
    What critical mass performance targets does the company aspire to achieve?
  • What macro-economic market drivers exist that will enhance the merged entity's ability to grab market share?
  • Power map: How will the balance between Customer and Supplier change with the merged entity?
  • Risks and opportunities involved in merging
  • What other hybrid strategy options are open to consideration to achieve similar goals?

The BUY process needs to align the market environment, shareholder objectives and company conditions in order to be successful


Assessment Phase M&A arrow
Thorough
business
review
Develop
transaction
strategy
Create
acquisition
plan
Business plan
scenario
analysis
Research
possible
targets

STAGE 1

STAGE 2

STAGE 3

STAGE 4

STAGE 5

Process Management
Execution and Transaction Phase M&A arrow
Contact
acquisition
targets
Target
review and
analysis
Non-binding offers
LOI/Preparation
for DD
Pre and full
Due Dilligence
Binding offers
closing
Transition planning

STAGE 6

STAGE 7

STAGE 8

STAGE 9

STAGE 10

Process Management

Psion Partners Added Value

Assessment Phase

Execution and Transaction Phase

STAGE 1

Thorough business review

  • Formulating strategic rationale for business development
  • Clarify need, acceptance and estimate potential
  • Competitive landscape review; SWOT

STAGE 6

Contact acquisition targets

  • Determine appropriate strategies ( confidential vs open; advisors vs management )
  • 1st contact with potential Targets ( tel. conversatons, anonymous teasers )
  • Pro-actively follow-up / monitor contacted parties

STAGE 2

Develop transaction strategy

  • Set screening criteria for possible targets. Review potential acquisition targets discreetly, including possible distressed opportunities.
  • Determine priority target(s) based on business goals
  • Estimate purchase price through quantitative and market based analysis

STAGE 7

Target review and analysis

  • Preliminary financial review
  • Business strategy and prospects
  • Consider tax and legal issues

STAGE 3

Create acquisition plan

  • Determine timetable and potential obstacles to execution (contingent liabilities, complex share structure, etc.)
  • Investigate and decide tactical positioning ("soft considerations", financial)

STAGE 8

Non-binding offers LOI / Preparation for DD

  • Evaluate and compare the non-binding offers obtained. Summarize key points of each offer.
  • Select participants for continuation to next round (could be around 3 for pre-Due Diligence)

STAGE 4

business plan scenario analysis

  • Work through criteria for a MAKE or BUY decision
  • "Stress-test" the business plan with key market and business drivers
  • Base case, best case, worst case scenario analysis

STAGE 9

Pre- and full Due Diligence

  • Draw up list of industry specific peculiarities for Due Diligence
  • Organise and coordinate data room (content as well as logistics)
  • Coach management for expert meetings
  • Valuation issues

STAGE 5

Target "shortlisting"

  • Freeze on acquisition criteria and freezing investment parameters
  • Research in more depth the short-list companies (strategic fit, performance, feasibility, product complement/match)
  • Leverage international Psion Partners network

STAGE 10

Binding offers closing transition planning

  • Evaluate and compare the binding offers. Summarize the key points of each.
  • Negotiate term sheet, assist the buyer through contract negotiations until completion. Determine optimal deal structure.
  • Consider integration issues and post-merger performance issues

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Exit planning

With few exceptions, exit planning is the most difficult period for any CEO or investor. Research shows that many owner managers fail to achieve the transition successfully - and do not receive their expected value. Psion Partners understands the boundaries and expectations and is able to advise and implement an exit.

Potential trade sale exit routes for Homeland security technology company

exit

Size of circle illustrates size of company - FY2008 unless otherwise stated


circle a

Hardware provider like company "x" and in the Public Safety Sector (PSS)


circle b

Hardware provider like company "x" but mainly supplies other markets


circle c

Associated hardware provider in MDT (Mobile Data Technology) and PSS market


circle d

System integrators / Infrastructure providers

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