Book Review:
Invest to Exit - A pragmatic strategy for Angel and Venture Capital investors
Dr. Tom McKaskill
Breakthrough Publications, 2009, Australia. (279 pages, 1.9 MB)
Investors in early stage ventures need to focus on strategic exits if they are to achieve a high return on their investments. This book explains the characteristics of strategic value, how the investor should negotiate the investment and how they should manage the process to a strategic trade sale. The book includes a very detailed discussion on the problems of high growth ventures, the unrealistic expectations associated with IPOs and the advantages of investing in strategic value ventures.
This book provides a detailed examination of the investment and exit opportunities in financial and strategic ventures. Underpinning the creation of value in both of these ventures are the drivers of high growth potential. In the case of a financial venture, the business itself must create the business model to exploit the growth opportunity. A financial business must build an organization which is capable of creating, delivering and supporting products and/or services in very high volumes. The probability of creating a successful high growth venture is very low due to the complexity of building out such a business model. Only the most successful will be able to drive the revenue and profit needed for an Initial Public offering (IPO). Those which are not able to achieve an IPO need to structure themselves for a financial trade sale.
Businesses which create value by developing an asset or capability which could be exploited by a large corporation achieve an exit through a trade sale to a strategic buyer. Strategic value is created through intellectual property or deep expertise which creates a sustainable competitive advantage in the hands of the strategic buyer. It is the strategic buyer who exploits the growth potential through an extensive distribution network.
The major recommendation in the book is that Angels and VC investors should focus on strategic value investments. These investments have very focused exit strategies which generally have lower execution risks, shorter timescales and higher returns than financial trade sale exits or IPO exits.
The book provides a detailed analysis of the product or service characteristics which create strategic value, a set of guidelines for identifying strategic buyers and processes for setting up the investment deal and the strategic sale.
Included in the book is a detailed explanation for preparing a business for a strategic exit.
The book has 15 chapters covering the following:
1.Begin with the end in mind
2.High growth - high risk
3.Spot the IPO
4.Financial v.s strategic exits
5.Threats and opportunities
6.Identifying strategic value
7.Finding strategic buyers
8.Enabling the opportunity
9.Reducing risks to the buyer
10.Setting up the exit deal
11.Evaluating potential investments
12.Executing the exit strategy
13.Structuring the trade sale deal
14.Selecting professional advisors
15.Conclusion - impatient capital
Testimonials:
“This book is a must read for the Angel Investors who wish to have profitable exits.”
John Mactaggart
Chairman, Australian Association of Angel Investors
“ Every entrepreneur seeking to work with outside investors should first stop, read Invest to Exit, and then proceed.”
John May
Chair Emeritus, Angel Capital Association, USA
Co-author, “Every Business Needs an Angel” Crown Business:2001
“Tom McKaskill’s insights into the ‘art of the exit’ provide a great roadmap for all Angel and Venture Capital investors. “
Joe Platnick, Pasadena Angels, USA
“This is a valuable read for the first time entrepreneur or investor, as well as for those of us with more experience.”
Jordan Green
Founder/Chairman Melbourne Angels,
Co-Founder/Deputy Chairman Australian Association of Angel Investors
“Invest to Exit is a must read for the Investor looking to maximize their returns from their private equity investments.”
Andrew Loch
Chair Gold Coast Angels
CEO of the Gold Coast Innovation Centre
“This book emphasizes tactics-backed strategy and focuses the reader on drawing the narrowest line between an investable exit and the present.”
Matt Yallop
Repertoire Management, New Zealand
“In my view, the book should be compulsory reading for all entrepreneurs and inventors who should work through the book before fronting investors. “
Ergad Gold - Principal and Executive Director
Momentum Investment Group
“This is compelling reading for investor and companies alike as they work collaboratively to achieve a superior result when they sell.”
Greg Sitters,
Sparkbox Investments Limited, New Zealand
“Tom is undoubtedly one of the foremost thinkers on what it takes to achieve strategic value in a business. I strongly recommend Tom’s latest book for all investors looking to profit from a strategic value mindset.”
Barry Palte
CEO EQ Capital, Australia
Book Review:
Raising Angel & Venture Capital Finance – An entrepreneur’s guide to securing venture finance
Dr. Tom McKaskill
Breakthrough Publications, 2009, Australia. (239 pages, 1.5 MB)
Angel and Venture Capital finance assists entrepreneur’s with high growth ventures to capitalise on their potential. However, Angel Investors and VC Funds have their own methods of working and their own specific objectives. Unless the entrepreneur can present the venture investment proposal in their terms and in a form which meets the investor’s objectives, the funding request will be unsuccessful. This book sets out how Angel and VC funding processes work, the criteria used to select investments and the processes used to manage those investee firms through to a harvesting event for the investors. This book assists the entrepreneur to prepare their business so that it is a compelling investment opportunity.
Angel and Venture Capital finance has been successfully used by numerous entrepreneurs to develop their ventures and, as a result, create significant wealth for themselves. However, the sector is poorly understood by entrepreneurs and business advisors. What they fail to fully appreciate is that the objectives of the Angel investors and VC funds are rarely the same as the entrepreneur seeking private equity finance. It is only when the entrepreneur understands that he or she has to tailor the venture to meet the requirements of the investor and not the other way around that the parties have a real chance of working together.
Private Equity and Venture Capital firms are in the business of generating a high rate of return for their investors, not in creating or building businesses.
The objective of this book is to show the entrepreneur how they can create a business which assists the Angel Investor or VC fund achieve their objectives. In doing so, there is a high probability of raising finance. Angel finance and Venture Capital is not for everyone no matter how profitable the venture might be. These investors are not in the business of solving an entrepreneur's need for funding albeit that may be the outcome. They are simply there to achieve a high rate of return for themselves, their investors or limited investment partners. The entrepreneur who understands this and builds a proposal to meet that objective, should be much more successful in gaining venture capital finance.
The book has 11 chapters and four indices:
1. A wealth creation partnership
2. Sources of Private Equity
3. Angel Investor finance
4. Strategic vs. Financial ventures
5. A compelling investment opportunity
6. Exit strategies
7. Preparing for the investment
8. Investor presentation techniques
9. Valuation
10. Finalising the investment
11. Conclusion
A. Awareness and Alignment Index
B. Venture Potential Index
C. Operations Development Index
D. Strategy Index
Testimonials:
‘Raising Angel & Venture Capital Finance is a great read for founders and entrepreneurs’
Joe Platnick, Partner iGlobe Treasury Management Ltd. and Director Pasadena Angels
‘Tom provides insights and applications in a logical, realistic and real-world way which benefits not only entrepreneurship scholars, but anyone with an interest in high-growth ventures. An absolutely must read as a guide to securing venture finance.’
Dr Alex Maritz, Director: Master of Entrepreneurship and Innovation
Australian Graduate School of Entrepreneurship
Swinburne University of Technology
This book is a synthesis of decades of Tom’s experience and is a must read for anyone who wishes to understand how to raise capital from the venture capital managers and angel investors.”
Richard Palmer, Investment Director NZVIF Limited
‘Tom McKaskill’s first-hand experience in raising venture capital is a valuable resource for any entrepreneur or business owner.’
Ian Knight, Partner, KPMG’s Corporate Finance Group, Australia
‘This book provides the essential guide for anyone contemplating seeking Angel investment.’
John Mactaggart, Chairman, Australian Association of Angel Investors
‘With his usual clarity, Tom explains the investor'sthinking to an entrepreneur and offers a practical guide to preparing for and pursuing such investors.’
Jordan Green, Angel Investor, Deputy Chairman,
Australian Association of Angel Investors Limited
‘Dr McKaskill succinctly describes the challenges and risks required to achieve a positive outcome for all parties in a balanced and straight forward manner.’
Greg Sitters, General Manager,
Sparkbox Investments Limited, New Zealand
Book Review:
An Introduction to Angel Investing - A guide to investing in early stage entrepreneurial ventures
Dr. Tom McKaskill
Breakthrough Publications, 2009, Australia (279 pages, 1.1MB)
Designed to help high net worth individuals become successful Angel Investors. Angel investing involves active mentoring and coaching of an early stage management team towards a successful exit or additional funding, probably from a venture capital firm. This book sets out a comprehensive and rigorous process which will help the Angel generate deal flow, evaluate investment proposals and manage the investment and subsequent harvest. The book also provides a useful guide to managing operational risks in the venture.
Many high net worth individuals are reluctant to invest in early stage entrepreneurial ventures because they are unsure of how to evaluate the investment or to manage their involvement. Even those that do undertake a limited number of investments are unsure how to best structure the deal or when to intervene to ensure their investment is protected. This book sets out:
-The role that Angels play in early stage ventures
-How they should generate a deal flow
-The manner in which they should evaluate potential investments
-How Angel Funds and Angel Networks work
-The contribution Angels should make to their investee firms
-How they should structure the investment deal
-How to develop a viable exit strategy
-The role of professional advisors
-Guidelines for operations risk management
Successful Angels know that investing in entrepreneurial ventures is more than just providing finance. There is an active involvement of the Angel in all aspects of the business. Successful Angel investing is active investing which requires the Angel to find the right investments to suit their personal knowledge, time and interests. Angel investors enjoy what they do but they also understand the risks involved. Those risks are substantially reduced with a systematic approach to the selection, management and harvesting of their investments.
An Introduction to Angel Investing shows how significant wealth can be achieved by private individuals through investments in high growth early stage entrepreneurial ventures.
Most wealthy individuals mistakenly believe that Angel Investing is beyond their means or outside their range of experience, but with the emergence of Angel Networks and Angel Funds, the majority of wealthy individuals can now participate in this class of investment.
Chapters:
1. Business Angels make a difference
2. An Angel profile
3. Sources of Private Equity
4. Your Angel activity profile
5. Strategic vs. Financial investments
6. Build a pipeline
7. Evaluating possible investments
8. Entry and exit considerations
9. Agreeing the investment
10. Managing your investments
11. Conclusion
A. Awareness and Alignment index
B. Venture Potential Index
C. Operations Development index
Testimonials:
“This book provides the essential basic groundwork for anyone contemplating investing in the exciting world of Angel investing.”
John Mactaggart, Chairman Australian Association of Angel Investors
“I recommend this book to anyone who wants to learn more about angel investing.”
Basil Peters, Angel Investor, Fund Manager for Fundamental TechnologiesII author of ‘Early Exits – Exit Strategies for Entrepreneurs and Angel Investors (But Maybe Not Venture Capitalists)’
“Anyone considering Angel investment should read this book.”
Jordan Green, Founder/Chairman Melbourne Angels, Co-Founder/Deputy Chairman Australian Association of Angel Investors Limited
“An Introduction to Angel Investing by Tom McKaskill is a must read for any successful entrepreneur wishing to stay actively involved with early stage ventures.“
Andrew Loch, Chair Gold Coast Angels, Angel Investor & CEO of the Gold Coast Innovation Centre
“This book is a must read for anyone contemplating venturing out into the exciting world of Angel investing.
Baboo Jeena, Executive Chairman, Jeena Partners, Financial Services
“This book is a must read for any Angel looking to venture into the lucrative ‘Venture Capital Industry’.”
Ivan Kaye, CEO BSI
“This could be considered as ‘the’ book on Angel investing.
Tony Falkenstein, Entrepreneur
Book Review:
Ultimate Exits – The secret behind selling entrepreneurial ventures at staggering prices
Dr. Tom McKaskill
Breakthrough Publications, 2010, (286 Pages, 1.4MB)
This book provides a detailed examination of the exit preparation process in financial and strategic ventures. Underpinning the creation of value in both of these ventures are the drivers of high growth potential. In the case of a financial venture, the business itself must create the business model to exploit the growth opportunity. A financial business must build an organization which is capable of delivering a robust business to the buyer which enables the buyer to exploit its revenue growth potential.
Businesses which create value by developing an asset or capability which could be exploited by a large corporation achieve an exit through a trade sale to a strategic buyer. Strategic value is created through intellectual property or deep expertise which creates a sustainable competitive advantage in the hands of the strategic buyer. It is the strategic buyer who exploits the growth potential through an extensive distribution network.
The major recommendation in the book is that entrepreneurs need to prepare the business for sale by focusing on the manner in which the buyer extracts value for it. Understanding how value is created, how buyers perceive risks inn the business and how buyers will exploit its potential are the drivers of a preparation program for selling the business.
Business owners, entrepreneurs and investors are locked into an old paradigm about value creation being based on proven profitability. But this is not what acquirers are evaluating. They are looking to the future and assessing what return they will achieve on their investment. Thus it is the future potential of the business which is much more important than its past. As soon as we accept this view, we can be proactive about creating a future which can deliver a much higher value to the buyer than what can be shown from past results.
Business which are valued on inherent profitability should focus attention on taking risks out of the business, improving their sustainable profitability, increasing their growth rate and identifying ways in which the buyer can harness new potential. Those businesses which can deliver high growth potential through intellectual property or deep expertise should focus on the strategic value in their business. This type of business can achieve staggering exit values by selling to a large corporation which has the capability and capacity to fully exploit its strategic value.
The book has 17 chapters covering the following:
1. Forget the multiple
2. Strategic v.s financial exits
Financial Exits
3. Leveraging the financial model
4. Increasing sustainable profits
5. Build a platform for growth
6. Finding financial buyers
Strategic Exits
7. Threats and opportunities
8. Identifying strategic value
9. Finding strategic buyers
Sale Preparation
10. Sustainable competitive advantage
11. Enabling the opportunity
12. Reducing risks to the buyer
13. The acquisition process
14. Deal structure
15. Selecting professional advisors
16. Other considerations
17. Conclusion
Testimonials:
‘To get the ultimate deal you must put yourself in the buyer’s shoes and seek to reduce business risk and increase growth potential.In the current market the benefit of this approachcannot be overestimated. Tom has set out a practical step-by-step process to extract maximum value from the sale of the business.’
Ian Knight, Partner KPMG, Corporate FinancePractice, Australia
“Ultimate Exitsis the ultimate book for entrepreneurs – don’t even think about selling your business without reading it.”
Tony Featherstone Tony Featherstone is a former managing director of BRW magazine
“A compelling read with lots of practical examples. This book turns conventional valuation methodologies upside down.”
Martin Checketts - Partner, Mills Oakley Lawyers Melbourne, Australia
“Tom McKaskill takes years of detailed research coupled with real world experience and boils it down to fundamental approaches which are actionable and effective for any business. For anyone who dreams of selling a business at more than fair market value, Tom McKaskill offers proven strategies to do so. While exit advisors are on every corner,Ultimate Exitsshows you how to get there at values of which you never dreamed. In my 35 years in business, I have never met a more wise and incisive exit strategist than Tom McKaskill. Tom is the real deal.”
Philip T. Miner CEO The Miner Corporation New Braunfels, Texas, USA