Acquisition Management

acquisition Management

THE AIMS OF INVESTING

Investing

The Xecology Program for the management of capital (realization of capital, allocation of capital); are preset by the following sequence;

Intelligence (Market and Business intelligence)
Strategy
Investing (Identification, Due Diligence, Acquisition Management)
Investment Management
Re-investment

Thus our program is systematic in ensuring that the full cycle of capital management is employed to ensure that the approach to making responsible and intelligent investments are both meticulous and mindful.

For private equity clients, once the acquisition is completed and integrated; the intention would be to enhance the influence, potential and capacity of that business.

TARGET INVESTMENTS

Identification of Target Companies

The market undergoes constant changes and it's participants are affected by fluctuating profit potential as they position themselves according to conditions and the landscape of market, as well as competitors and the changing needs and aspirations of clients, customers.

Xecology compiles market intelligence to put together reports on market observations, in order to seek out the companies with the potential to be a positive, viable match for organisations looking to expand through the strategic integration.

Prospective acquisitions will be well managed, have the capability, drive and focus to follow exact strategies and processes that will lead it to further success; including the realised potential to secure position within a captured section of the market.

Xecology's involvement in the management of transactions, integration / migrations and post transaction development is therefore advantageous for both performance development and comprehensive evaluations (observations, analysis, conclusion).

RESEARCH AND DEVELOPMENT

Research and Development

Part of presenting a clear path to success involves effectively communicating the company’s research and development plan and organization. Research and development forms an important part of many technology and healthcare companies. PE firms invest heavily in to find acquisition targets that fit their criteria and perform substantive industry and competition research before making an offer. For PE investors, its key that the message and plan be communicated in a simplified manner.

Private equity investors also look to understand how a target company’s research and development compares and competes with others in the market. Target companies are expected to identify the right amount to be spend on research and development – an amount that is sufficient to differentiate the target company from the marketplace as well as to drive additional revenue to support high valuations.

ALTERNATIVE INVESTMENT STRATEGY

Alternative Investment Strategies

Alternative ways of investing include;

Mezzanine investments (a hybrid of equity and debt financing),
minority growth capital and
change capital.

We assist in fulfilling a complete financial overview of the target company, along with properly documented assumptions.

ACQUISITION MANAGEMENT

Acquisition Management

Your acquisition mandate will instruct us on the following;

Location
Type of business
Size (Turnover, Profit, no of employees)
Maturity Cycle of business
Price and Financing

A Mutual non disclosure agreement will ensure that matters are kept confidential, secure and not related in any manner, to another party.

We have a full set of terms in this website, under the section of Client Relations; determining the manner in which our business is conducted, protective terms for you as the client, as well as our fees and expectations.

DUE DILIGENCE

The following factors generally make a strong Private Equity target;

Reasonable acquisition price

Management Team. The CEO and Proven management team that can stay on and perform. Study a brief overview of their business background, their experience and their importance within the company, including influence.

Business Model A business model is essentially the strategy that a company uses to conduct operations in a manner to maximize profit. A company can use, by example, the model of economics to sell in higher quantities but with lower profit margins, or, sell fewer, higher-quality items but earns a larger profit per product sold. The model must help to survive recessions, overcome competition and benefit from economic booms.

Secure Market Advantage

Competitive Advantage: A competitive advantage iincludes superior products, patents, brand power, technology or operating efficiency. Ensure that branding power is secure through it's difficulty for competitors to replicate.

Leading and defensible market positions

Limited outside threats, including changes in the economy.

Ability to operate the business more effectively without public scrutiny

Strong Financials

Revenue; Often referred to as a company's top line, as it's always listed as the first line of every company's income statement. A company should maintain positive trends over varying periods; a company with a trend of falling annual revenues signals it has trouble selling its products and services or finding other sources of revenue.

Net income; More casually called profit, earnings or the bottom line; net income is simply the amount of money a company earned from sales after expenses and taxes have been paid. A company's net income listed on the bottom line of the company's income statement. A company with growing net income each year shows that the company knows how to effectively sell its products, slash or control its business operating costs or a combination of both.

Profit Margin; Profit margin (sometimes referred to as net profit margin, is simply the percentage of revenue the company takes in as profit (after expenses, interest and taxes have been paid). A company's profit margin is net income divided by total revenue. A company with steady or growing profit margins every year, even during a recession. Companies with growing profit margins signal that the company can command higher prices because consumers are willing to pay for their product; steady profit margins show the company can effectively control its operating costs, keeping the company efficient. Both types of trends indicate a company is profitable and can reward shareholders with returns.

Debt to Equity Ratio With the debt-to-equity ratio, you can find out how much debt a company carries compared to the amount of equity shareholders have in the company. What to look for: A company with a low amount of debt in relation to its equity (total debt levels that are no higher than the company's total equity levels; a ratio of 1:1 or lower). Used as a safety measure, it tests how well the company can repay its debt obligations in the event that the company runs into serious financial problems. Generally, the lower the debt-to-equity ratio a company has, the less risky it is to you as an investor.

Price to Earnings Ratio (P/E) Finding a company with strong financials is not enough, you can pay too much for a great company -- and that can mean limited upside potential on your gains (and even a loss). With a stock's price-to-earnings ratio (P/E), you can find out if a stock is overpriced. The P/E ratio compares a stock's price to the amount of profit per stock share (earnings per share) the company generated. A company with a P/E ratio that is on par with or lower than the overall market's P/E ratio (which has historically been between 14 and 17) and the company's peers in the industry. In general, a well-run company with a relatively low P/E ratio signals that the company's stock is trading at a fair price or even a bargain. [Warren Buffett uses this "value" investing approach and has been wildly successful.

Strong Free Cash Flow (FCF) Generation

Limited Free Cash Flow (FCF) cyclicality

Low Capital Expenditure requirements and Net Working Capital requirements

Strong Asset base

Clean Balance Sheet

Growth opportunities

Efficiency enhancement opportunities

Potential for immediate asset sales

Viable exit strategy

These terms help you find companies that a) can be understood and from which agreement can be established over it's leadership and business perspective, b) operate with strong management and financial health and c) are trading at a good value. These will be key to your investing success.

Acquisition of Businesses and Business Assets

Active, discreet, direct and efficient; Xecology's off-market acquisition services for investors and private equity firms provides an opportunity to capitalise on emerging market trends and the optimisation of profits and capital values.

Xecology initiates a comprehensive analysis on prospective acquisitions as well as current businesses held within the group portfolio; monitoring market potential, market risks, inherent organisational strengths, against future potential and business development opportunities.

Xecology provides the following set of specialised acquisition services,

Investor networking (to detect investor movement and potential exits).
Independent business valuations
Business evaluations (to discover real potential and strengths)
Negotiations on the heads of terms,
Transaction management
assimilation of the acquisition into group strategies.
Programming the acquisition for stabilization and growth

We adopt mandates with a causative view on the potentials of a business; to intend the creation of real value in the business through establishment, production, financial management, marketing intelligence and goodwill. The result will mean exiting in the right manner, with success, legacy and with sufficient reward to re-invest into the group’s strategy.

BUSINESS
ACQUISITIONS

TRANSITION
MANAGEMENT

Assimilation Management

We will also implement systems to make the management of such entities easier, more precise, detailed, informative and uniform across the portfolio. The incoming asset will ultimately be made to add value and influence.

The portfolio itself will be analysed from the perspective of strategy; because together, each entity forms a whole, the portfolio itself and through knowledge and skill of managing a group (in this case, a group of companies), we can resolve towards bringing together the residual power and influence to further target market opportunities and to safeguard against threats.

Where Xecology is different and beneficial to the PE Group is in it’s style and view of the long term; whereas PEs are often geared towards the aggressive short term delivery of profits; Xecology is strictly, aggressively geared for the longer term and the greater achievement in profit, growth, influence, power and legacy.

The goal is increased viability to the highest level, for the longest term possible.

ASSET AND COMPANY SALES

Asset and Company Sales

The Completion of a single Re-Investment Cycle

The sequence of investment may start at either a seed or venture level but where it has reached maximised corporate development to capture the market, streamline operations, build capacity and capabilities; it's next step may be either diversification or exit for the current investors. Other investors may see an opportunity from their viewpoint to generate commercial advantage, which would be based upon their own resources and circumstances; including inherent expertise, where the incoming investor leverages resources and assets in accordance with their own aspirations, requirements and be limited only by their imagination and ability.

As part of a portfolio management exercise, Xecology seeks to deliver advantage to both seller and buyer; the seller diversifies away, the buyer diversifies inwards, both achieving the optimization of the investment portfolio.

The buyer and seller may both be signing mandates for the conduct of campaigns and the management of transactions. Opportunities are sought according to their financial and commercial interests.

The data and activity of both parties are protected by confidentiality and service level agreements. Our mandate terms are covered in this website under the section Client Relations.

Investment Factors

It's surprising how many investors overlook key indicators about a company before they invest. As a result, they become owners of lousy companies that lose money. Using just eight key elements to analyze a company can mean the difference between reaping healthy investment gains.

The aim is to search target businesses that will be able to seamlessly execute and achieve the following three targets;

transform the company’s business model to reflect how consumers and businesses want to purchase and use technology in the current world;
grow through effective sales motions, including new joint ventures, alliances and new customers; and
reduce costs and creating efficiency within the company’s existing structure.

From an understanding of investment targets, Xecology's consultants look for agility and the ability to successfully facilitate change, work cohesively and with a focus on achieving and maintaining transparent communication.

Transition Management

The core of Xecology is it's management of corporations and businesses.

Following successful acquisition of a commercial asset, such as an operational or start up business; we are prepared to start the process of applying Xecology principles, systems and programs that will deliver the change and leverage potential to deliver quality, high performance and further residual potential.

Xecology, Exit Management, Chicago Tower

We don’t limit mandates to any industry or the size of businesses we approach; we apply full discretion and negotiate heads of terms in advance that are transparent and mutually beneficial, ensuring ethical procedures and aims for all parties. We negotiate for the upside benefit and targets for clients under mandate and we will disclose any connections to parties we approach, where we may have had previous, or have existing relationships and active mandates.

Xecology's executions in the sale and purchase of assets will incorporate effective and advanced methods of asset marketing, as well as skills in negotiations for achieving the appropriate price and terms.

Our methods and procedures are transparent, ethical; delivering terms and arrangements that are mutually beneficial, for both you as the seller and for the buyer.

We assist in the search of the more mature businesses, with a regular cash flow stream as opposed to new ventures which have been spurred by the propagation of digitization and software technologies.

AGENCY SERVICES

CLIENT RELATIONS MANAGEMENT

CLIENT AGREEMENTS

Our mandate terms are covered in this website under the section: Client Relations.

We are a business to business organisation, serving professional investors and executives of corporations for the management, sale and acquisition of businesses.

See also our section on corporate management and Strategy.

SERVICE STANDARDS

Our methods, procedures are transparent and ethical. Xecology aims to deliver value under terms and deal arrangements that are of mutual benefit, for both seller and for the buyer, where the conditions of the market are being presented.