Category Archives: Industries Investment Research

Introduction

In the ever-evolving landscape of financial markets, integrating cutting-edge technologies is not merely a fleeting trend but a vital strategic imperative. Amidst these groundbreaking advancements, the paradigm of Generative AI Investment has emerged as a revolutionary influence, transforming the way organizations approach investment strategies. This article explores the profound impact of Generative AI Investment on contemporary finance, scrutinizing its applications, benefits, and the strategic advantages it offers to forward-thinking enterprises.

Understanding Generative AI Investment

Generative AI Investment represents the convergence of artificial intelligence and finance, employing sophisticated algorithms to autonomously generate investment strategies. These algorithms leverage the capabilities of machine learning, enabling them to analyze extensive datasets, identify patterns, and execute well-informed investment decisions in real time.

The Evolution of Generative AI in Finance

Historical Context

The inception of Generative AI in finance dates back to the early 21st century, coinciding with the ascent of machine learning and data analytics in the financial sector. Following this era, continual technological progress has propelled Generative AI Investment to the forefront of strategic decision-making.

The Role of Machine Learning

A key component of generative AI is machine learning, a branch of AI that allows systems to learn and adapt without explicit programming. In financial environments, where standard models often fail due to dynamic markets, this adaptive learning aspect becomes very beneficial.

By embracing the innovative landscape of Generative AI Investment, organizations can navigate the complexities of modern finance with enhanced efficiency and strategic acumen.

Trends in Generative AI Investment

Generative Artificial Intelligence (AI) Investment has emerged as a transformative influence in the financial sector, reshaping conventional investment approaches and creating new avenues for strategic decision-making. As technological advancements persist, Generative AI Investment trends are rapidly evolving, providing unprecedented opportunities for businesses to optimize their financial portfolios.

Trends in generative AI investment

Trends in generative AI investment

Finance’s Adoption of Generative AI is Predicted to Follow an S-Curve, with a Slow Start and Quick Growth as Institutions Acknowledge Its Revolutionary Promise. The S-curve indicates a future saturation point for financial strategies driven by AI innovation, which will occur as the technology develops and becomes more widely accepted.

Generative AI Adoption in finance will likely follow an S-curve

Generative AI Adoption in finance will likely follow an S-curve

Source: BCG Analysis

Rise in Data Utilization 

The cornerstone of Generative AI Investment lies in its ability to analyze extensive datasets, unveiling concealed patterns and trends. With the exponential increase in available data due to the expansion of digital platforms and Internet of Things (IoT) devices, Generative AI algorithms are becoming more proficient at processing and interpreting diverse data sources. This trend heightens the precision and depth of market analysis, facilitating more informed investment decisions.

Sophisticated Predictive Analytics

Advancements in machine learning algorithms are propelling Generative AI Investment towards more refined predictive analytics. These algorithms can scrutinize historical data, market trends, and even social media sentiments with remarkable accuracy. Consequently, investors can leverage more precise forecasts of market shifts, enabling them to make timely and strategic investment decisions.

Incorporation of Understandable AI 

As the complexity of Generative AI models increases, there is a growing emphasis on integrating understandable AI techniques. Comprehending the decision-making process of these models is crucial for fostering trust and ensuring transparency in the investment process. Understandable AI enhances interpretability and facilitates adherence to regulatory requirements, a critical aspect in the financial sector.

Emphasis on ESG (Environmental, Social, and Governance) Criteria 

Generative AI Investment is incorporating more and more ESG considerations into its decision-making process as a reaction to the growing public awareness of environmental and social issues. Investors understand how important it is to match ethical and sustainable activities with their holdings. These days, generative AI algorithms are being trained to assess businesses according to their ESG performance, giving investors the chance to encourage investments that align with social responsibility.

Personalized Investment Strategies 

Generative AI is transitioning beyond generic investment approaches, with personalization emerging as a prominent trend. Algorithms are tailoring investment strategies to individual investor preferences, risk tolerance, and financial objectives. This customization ensures that investment portfolios closely align with the distinct needs of each investor, offering a more satisfying and efficient investment experience.

Collaboration Between AI and Human Experts 

While AI plays a pivotal role in data analysis and decision-making, the significance of human expertise remains unparalleled. A noteworthy trend is the increasing collaboration between Generative AI systems and human investment professionals. This collaboration leverages the strengths of both, with AI managing complex data analysis and humans providing nuanced insights, intuition, and strategic guidance.

Benefits of Generative AI Investment

Generative AI Investment offers unparalleled benefits in finance, empowering professionals with data-driven insights for informed decision-making. Its automation capabilities enhance operational efficiency, enabling real-time adaptation to market changes, reducing human errors, and instilling confidence in strategic financial initiatives.

Benefits of generative AI investment

Benefits of generative AI investment

Enhanced Decision-Making

Generative AI Investment empowers financial professionals with data-driven insights, enabling them to make well-informed decisions. The ability to process vast datasets in real-time ensures decisions are based on the most up-to-date information, minimizing the impact of emotional or subjective biases.

Improved Efficiency

The automation capabilities of Generative AI Investment streamline financial operations, leading to improved efficiency. Routine tasks such as data analysis, portfolio management, and risk assessment can be executed with unprecedented speed and accuracy, freeing up valuable resources for strategic initiatives.

Enhanced Decision-Making: Generative AI Investment empowers financial professionals with data-driven insights, enabling them to make well-informed decisions. The ability to process vast datasets in real-time ensures decisions are based on the most up-to-date information, minimizing the impact of emotional or subjective biases. Improved Efficiency: The automation capabilities of Generative AI Investment streamline financial operations, leading to improved efficiency. Routine tasks such as data analysis, portfolio management, and risk assessment can be executed with unprecedented speed and accuracy, freeing up valuable resources for strategic initiatives.

 

Adaptive Strategies

In a dynamic market environment, adaptability is a key determinant of success. Generative AI Investment enables organizations to develop adaptive investment strategies that respond quickly to changing market conditions. This flexibility is crucial for staying ahead of competitors and capitalizing on emerging opportunities.

Reduced Human Error

Human error has historically been a challenge in financial decision-making. Generative AI Investment minimizes the impact of such errors by automating routine tasks and providing data-driven insights. This not only improves accuracy but also instils confidence in investment strategies.

Challenges and Considerations

Data Security

Protecting large datasets becomes a critical factor, highlighting the need for strong cybersecurity defenses. Protecting sensitive data and guaranteeing regulatory compliance require the implementation of robust security procedures.

Ethical Considerations

In the realm of advancing technologies, ethical considerations must take precedence in the decision-making process. It is vital to ensure that investments in Imaginative AI Finance align with ethical guidelines and industry norms, fostering trust among stakeholders.

Regulatory Compliance

Imaginative AI Finance must strictly adhere to regulatory frameworks governing financial markets. Conforming to these regulations is crucial to avoid legal consequences and uphold the integrity of financial operations.

Integration Complexity

The incorporation of Imaginative AI Finance into existing financial systems may pose challenges. Financial institutions need to allocate resources to streamline integration processes, optimizing the benefits of this technology without disrupting ongoing operations.

Magistral Consulting’s Innovative AI Financial Services

In the rapidly evolving realm of contemporary finance, Magistral Consulting stands out as a frontrunner in delivering state-of-the-art Innovative AI Investment services. Demonstrating unwavering dedication to excellence and an in-depth comprehension of the financial sphere, Magistral Consulting provides customized Consulting to empower enterprises to unlock the complete potential of Innovative AI for optimal financial results.

Magistral Consulting’s Innovative AI services are characterized by a methodical approach to data scrutiny, harnessing cutting-edge algorithms to derive meaningful insights. The organization’s team of seasoned data analysts and financial specialists collaborates to devise and execute personalized Innovative AI Investment strategies tailored to match the distinctive objectives and risk tolerance of each clientele.

Magistral Consulting’s proficiency spans diverse sectors, encompassing banking, wealth management, and investment enterprises. The Innovative AI Consulting provided by the organization not only aims to maximize yields but also prioritize the significance of risk alleviation and adherence to industry regulations.

Beyond its advanced technological Consulting, Magistral Consulting sets itself apart through an unwavering commitment to continuous support and cooperation. Recognizing that the triumphant integration of Innovative AI Investment necessitates ongoing scrutiny, fine-tuning, and adaptation, Magistral Consulting’s client-centric methodology ensures that enterprises receive sustained guidance and aid to navigate the dynamic landscape of financial markets.

Future Outlook

Continued Innovation

The trajectory of Imaginative AI Finance indicates a promising future for the financial industry. Advances in machine learning, natural language understanding, and data analytics will contribute to refining and expanding imaginative AI algorithms, unlocking unique opportunities for investors.

Collaboration and Knowledge Sharing

In an industry often marked by competition, fostering an environment of knowledge exchange and collaboration is advantageous. Such cooperation will accelerate the development and adoption of Imaginative AI Finance, ensuring its evolution to meet the complex challenges of the financial landscape.

Investment in research and development- Imaginative AI

Investment in research and development- Imaginative AI

Democratization of Technology

As Imaginative AI Finance matures, the technology is expected to become more accessible, empowering a broader spectrum of financial institutions to leverage its capabilities for strategic decision-making. This democratization will level the playing field, enabling even smaller organizations to compete on equal terms.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates, and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modelling, Portfolio Management, and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction:

In the ever-evolving business environment, companies frequently encounter the necessity of acquiring external proficiency to meet their project needs. This is particularly crucial in the context of the Request for Proposal (RFP) process. Nevertheless, overseeing the RFP process proves to be an intricate and time-intensive undertaking, requiring careful strategizing, coordination, and proficiency. Magistral Consulting has risen as a distinguished provider of RFP Management services, serving as a paragon of excellence by presenting a thorough range of solutions designed to simplify and enhance the entirety of the process.

What is RFP Management?

RFP Management involves the end-to-end process of preparing, issuing, and evaluating RFPs. It is a critical aspect of project procurement, as it sets the stage for identifying the right vendors, selecting the best-suited proposals, and ultimately ensuring the successful execution of projects.

Importance of RFP Management:

Efficient RFP Management is essential for various reasons, including:

Identifying the Right Vendors

Through a well-structured RFP, organizations can attract and evaluate proposals from potential vendors, ensuring the selection of the most qualified and capable partners.

Cost-effectiveness

Proper RFP Management allows organizations to compare and contrast proposals, enabling them to choose the most cost-effective solution that aligns with their budgetary constraints.

Streamlining the Decision-making Process

A well-managed RFP facilitates the decision-making process by providing a standardized framework for evaluating proposals against predefined criteria.

RFP Data and Analytics

The typical success rate for winning Requests for Proposals (RFPs) stands at 44%.

What constitutes a commendable success rate for proposals? On average, organizations achieve a 44% success rate in winning their RFPs. Of all teams, 17% report successful bids in the range of 30-39%, while another 16% secure victories in 40-49% of their RFP endeavors. Surprisingly, 8% of teams boast an impressive 80-100% success rate in winning proposals.

Large-scale enterprises exhibit the highest average success rates in proposal wins (though Mid-Market companies are not far behind).

Enterprises, defined by their workforce of 5,001 to 10,000+ employees, achieve a noteworthy 46% success rate in the RFPs they partake in. However, Mid-Market companies, comprising 501 to 5,000 employees, closely trail with a commendable win rate of 45%.

Smaller companies secure victories in 42% of their proposals.

Experiencing a significant jump from a 38% success rate last year to an impressive 42% this year, Small & Midsize companies (ranging from 1 to 500 employees) make remarkable progress. Although larger companies enjoy advantages in the sales cycle due to their likely widespread recognition and broader array of offerings and resources, it’s noteworthy that small businesses are only slightly lagging behind Mid-Market and Enterprise counterparts.

The typical advancement rate for RFPs is 55%.

Advancement rates present a somewhat brighter picture than the overall RFP success rate. On average, companies move forward to the shortlist 55% of the time, though this figure varies based on company size. Enterprise teams lead in advancement rates, reaching 59%, while Mid-Market follows closely behind with an advancement rate of 56%.

The RFP Response Journey

The process of responding to RFPs involves a sequence of stages, commencing with an initial evaluation of the bid’s value and culminating in the submission of a tailored proposal. For entities involved in RFP responses, this progression can be delineated into six integral components:

Commencing with a Kickoff Meeting

The commencement involves a kickoff meeting that includes crucial stakeholders such as the proposal manager, subject matter experts, and proposal writers. During this session, teams thoroughly examine all RFP requirements, making informed decisions on the viability of proceeding with the bid. Diligent consideration ensures that teams direct their efforts towards RFP responses that align with their organizational goals, business objectives, and internal schedules.

Preparing the RFP Response

Prior to delving into the response, teams compile a preliminary RFP response, integrating templates, signature pages, and pre-prepared documents. Utilizing RFP response or management software, teams streamline the document creation process by populating it with merge fields or preapproved content.

Crafting the RFP Response

The central phase involves crafting the RFP response, necessitating collaborative efforts to address all questions outlined in the RFP. Team members gather existing content and identify any gaps, prompting requests for new content from subject matter experts or external team members. The final step involves assembling all crafted content into a visually appealing RFP response using a pre-approved template.

Reviewing the RFP

Before submission, the RFP response undergoes a thorough review, revision, and approval process to ensure accuracy and completeness. Teams must adhere to specific submission requirements outlined in the RFP, considering file types and submission locations.

Submitting the RFP Response

With the response finalized and all criteria met, teams submit the RFP response. Attention to detail is paramount at this stage, as teams verify adherence to the RFP’s submission guidelines to avoid complications.

Auditing and Analyzing Responses

Post-submission, teams allocate time for auditing and analyzing responses, employing analytics software to track successes and areas for improvement. Valuable insights into winning bids, frequently used content, and areas needing refinement empower response teams to adopt a proactive approach for future endeavors.

Key Benefits of RFP Management Services

RFP Management involves the process of creating, submitting, and managing requests for proposals in business and government procurement. It is a crucial part of the procurement process that helps organizations find the best suppliers or vendors for their projects.

Unlocking Success with RFP Management Services

Unlocking Success with RFP Management Services

Time and Resource Efficiency

Streamlined RFP Management process saves valuable time and resources for clients. By handling the complexities of RFP development, vendor identification, and proposal evaluation, organizations can focus on their core competencies, enhancing overall efficiency.

Expertise Access

Access to industry professionals streamlines the RFP Management process with an extensive pool of knowledge. Clients benefit from harnessing this specialized expertise, ensuring the precise development of their RFPs and well-informed, comprehensive evaluations.

Enhanced Vendor Accountability

Through the utilization of its network and industry insights, we can verify the inclusion of solely reputable and accountable vendors in the RFP process. This minimizes the potential of collaborating with unreliable vendors, thereby enhancing the overall success of the project.

Enhanced Proposal Quality

A full-fledged commitment to tailored RFP development results in high-quality proposals from vendors. This, coupled with a meticulous evaluation process, ensures that clients receive proposals that not only meet but often exceed their expectations.

Cost Optimization

Through strategic vendor identification and negotiation, RFP Management helps clients optimize costs without compromising on the quality of deliverables. This contributes to the overall financial success of the project and maximizes return on investment.

Magistral Consulting: RFP Management Services

With Magistral Consulting’s RFP Management services, clients gain valuable access to a team of seasoned professionals and industry experts. The consultancy brings a wealth of knowledge to the RFP Management process, ensuring that clients benefit from specialized expertise.

Magistral Consulting: RFP Management Services

Magistral Consulting: RFP Management Services

Tailored RFP Development

Magistral Consulting understands that every project is unique, and a one-size-fits-all approach doesn’t suffice. The company excels in developing customized RFPs tailored to the specific needs, objectives, and scope of each project. This involves a collaborative approach, where the client’s requirements are meticulously analyzed and translated into a comprehensive RFP document.

Strategic Selection of Vendors

Selecting appropriate vendors stands as a pivotal stage in the RFP process. Magistral Consulting adopts a strategic methodology for vendor selection, utilizing its broad network and industry expertise to identify potential partners in harmony with the client’s objectives. This involves a meticulous vetting procedure to guarantee that only vendors who meet the criteria of qualification and reliability are extended invitations to participate.

Transparent and Efficient Communication

Effective communication is the cornerstone of successful RFP Management. Magistral Consulting ensures transparent and efficient communication throughout the RFP process, keeping all stakeholders well-informed and engaged. This includes providing clear instructions, timelines, and expectations to both clients and vendors and fostering a collaborative environment.

Proposal Evaluation and Scoring

Magistral Consulting employs a robust methodology for evaluating and scoring proposals. This involves a systematic analysis of each proposal against predefined criteria, ensuring a fair and objective assessment. The company utilizes advanced tools and technologies to streamline the evaluation process, saving time and resources for both clients and vendors.

Negotiation and Contract Management

Once the evaluation is complete, Magistral Consulting excels in negotiating favorable terms and conditions on behalf of its clients. The company ensures that the final contracts align with the client’s objectives, mitigate risks, and establish a solid foundation for successful project execution. This includes meticulous attention to legal and compliance considerations.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

 

 

 

Introduction

Deal support campaign is an effort to locate targets for accelerators, angel investors, and venture funds looking to invest in ideas and smaller firms. It is an integral part of the deal origination process. The sourcing of investment possibilities by private equity (PE) companies, venture capital firms, and investment banks is known as deal origination. It is the initial phase in making a transaction and entails producing deals to offer to possible purchasers. Effective deal origination is the basis of successful investing. Deal origination firms ensure that the company doesn’t miss out on worthwhile investment opportunities. It also scans the industry for the most significant sales opportunities to meet the investment objectives.

Deal support campaigns have made the deal origination process more accessible and systematic. These platforms also provide a customized experience to the users by researching and listing deals and maintaining a record of all transactions between them, enabling them to view the transaction history before closing a deal.

Importance of Deal Support Campaigns

Firms in the financial services industry are constantly evolving and growing. Financial Services companies must be able to adapt and fulfill their changing needs. The business clients are looking for goal-oriented planning, proactive insights, individualized outreach, etc.

Deal support campaigns provide appealing chances to uncover prospective companies early in their lifecycles, far ahead of the competition, resulting in a robust proprietary transaction flow. It concentrates on identifying possibilities directly related to their goals and investment thesis, resulting in higher conversion rates. Prequalifying leads through research saves time by preventing companies from wasting time on leads that aren’t relevant to their investment thesis or industry focus. Data-driven deal support campaigns entail gathering the information needed to deliver customized outreach and pitches for each customer, allowing the company to stand out from the crowd.

Strategies for Deal Support Campaigns

Strategies for deal support campaigns

Strategies for deal support campaigns

Deep Targeting

Deal sourcing strategies are tailored to a single specific demand through deep targeting. It involves making an attempt to reach the appropriate audience. It contains thorough background information about the investor and the businesses they invest in. Through online deal sourcing, both the buyer and the vendor can connect with a wider, more geographically distributed audience. The platforms serve as a non-geographical means of bringing together financiers and investors who share similar beliefs, aspirations, and objectives. Make connections with potential venture capital partners and lead the round of fundraising with other participants. Therefore, in order to locate transactions, it pays to develop and maintain good relationships with other venture capital firms.

Filtered Target

To make deals easier and more convenient, it gives filters that include general lists and allows indexes to focus on. Not only that, but one may also create blocklists of candidates who aren’t a good fit for you. It can help with segmenting, allowing you to generate more successful leads. It provides you with the right kind of investor as per your need.

Integration of an email API

It can make their emails and messages appear as if they were customized and sent directly from the account by using API. This demonstrates their enthusiasm and aids in developing a positive relationship with the prospects. The data is time-stamped, which aids in calculating conversion rates and managing performance at any point during the deal sourcing process.

Data-driven

It places a premium on prospect interaction for deal support campaigns. Data-driven deal sourcing, on the other hand, analyses data to identify potential investment prospects before reaching out to or engaging with them. It is often employed in outbound efforts and works best when combined with relationship-driven and in-person deal sourcing tactics. A shared network might lead to data that can help businesses generate more tailored interactions with opportunities, providing them with a competitive advantage. The conversion rate increases because the message is customized to the right audience.

Types of Campaigns

Deal support campaigns play a crucial role in identifying, acquiring, and maximizing the value of investments. Here are some types of deal support campaigns specifically relevant to PE and VC:

Types of campaigns

Types of campaigns

Equity campaign

The primary approach to investing in a business is through a regular equity campaign. You choose the company you wish to invest in, and if the campaign meets its financing goal, you become a stakeholder in that company. The shares increase in value as the firm grows in importance, allowing them to participate in the company’s future success. It offers two types of equity campaigns: primary and secondary, with direct campaigns accounting for most equity campaigns on the Seders platform. A primary campaign is one in which the company issues equity by issuing new shares. A secondary offers shares from existing shareholders.

Convertible campaign

Businesses frequently employ convertible campaigns when a huge fundraising round is on the horizon, but they need to seek funds for a smaller project in the meantime. By selling a convertible, the corporation avoids having to value its company right now, potentially hurting future investor discussions.

It allows you to invest at a discount to other investors, changing your investment into equity in the future. This is a standard arrangement used by angel investors and venture capitalists worldwide. When the convertible converts to equity in the future (often when a new round of funding is announced), it will be converted based on the discount to the valuation at the time of the latest round of funding, which may be subject to a maximum value (known as the “Valuation Cap”). Before investing, strongly advise potential investors to familiarize themselves with this document.

Cohorts Campaigns

Investing money into a cohort campaign enables you to click once to make many investments. Upon investing in a cohort campaign, you acquire ownership stakes in every one of the underlying companies selected by the campaign manager. The campaign organizer discovers the startups and often provides them with mentorship, assistance, and direction (e.g., by running an accelerator). The secret to successful equity investing is diversification, which you can achieve with a cohort campaign that also gives the firms extra help and support.

Funding Campaigns

Less popular fund campaigns allow you to invest in an investment fund through Seeders. It will support you as a limited partner in the investment fund, and it will hold your interest in the fund on your behalf. Unlike a cohort campaign, you will receive an interest in the fund rather than shares in the underlying firms.

Timeline of Deal Support Campaign

Whether the firm meets its minimum or maximum funding objective, each startup campaign will run for a predetermined period. There is a start and end date, and Investors can continue to invest until the listed end date, even if the firm has met its funding objective startup meets its minimal funding objective before the deadline. Under specific circumstances, startups can extend or abbreviate their campaigns. It also has an option to do a rolling close. If a startup meets its minimum financing target before the campaign’s end date, it can choose to extend the drive and collect the monies raised to that point. This must be disclosed to investors promptly.

Conclusion

For many investment bankers, venture capitalists, and private equity companies, finding the ideal deal support is the missing jigsaw piece. It is a step in the deal origination process that is used to identify and target prime investment opportunities. If someone does not use a private corporate intelligence platform, researching offers online may be difficult and time-consuming. Online sourcing initiatives without data-driven personalization may appear unpleasant. Without the assistance of reliable data service providers, a deal support campaign might result in inconsistent or obsolete information.

Magistral Consulting’s Services on Deal Support Campaign

Screening Targets- SOP-based

Standard operating procedures (SOPs) are created for the customers to meet the needs of Private Equity clients during the deal origination and deal sourcing process. Once all the complex operations have been established, the customer is asked to sign off on the project.

Industry Tracking and Landscaping

It is essential to take advantage of new trends. It should keep a close eye on its major markets, regions, and industries. Magistral Consulting has helped track industries like healthcare, blockchain, cybersecurity, heavy engineering, and many more.

Potential Target Identification

A list of potential eligible targets is compiled using secondary and primary sources. Databases are secondary sources, whereas industry organizations, accelerators, and angel investor clubs are the primary sources.

Target Pipeline Management

Magistral consulting can manage the process of Incoming sales opportunities and track through several phases of the lead’s journey until they are eventually closed.

Marketing

Magistral consulting helps in Case Studies, Thought Papers, and white papers and does Impact Analysis, and Sustainable Investing.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

For any organization to do well, it needs a plan – like a roadmap showing the way to its goals. Making this business planning support involves setting goals, figuring out how to reach them, understanding possible problems, and coming up with a plan to solve those problems. So, a good business plan is like a guide that helps organizations know where they’re going and how to tackle challenges along the way.

That being said, writing a successful business plan can be difficult and need a lot of time, money, and experience.

Business planning support is offered to help with this problem. It is the help and direction provided to people or organizations in order to help them create a business strategy. Consultants, mentors, or businesses that specialize in business planning can offer this kind of support.

Helping people or organizations develop a workable business plan that can direct their strategic planning and decision-making is the main goal of business planning support. This assistance can be given in a variety of ways, from crafting a thorough business plan to offering suggestions and criticism.

For individuals or businesses, business planning support offers a number of benefits. One of the primary advantages is their capacity to identify their advantages and disadvantages. By doing this analysis, they may develop plans to overcome their weaknesses and build on their strengths, which is crucial for providing them a competitive edge in their industry.

Business planning support can also assist people or organizations in recognizing possible obstacles and creating plans to get beyond them. With this help, they may analyze market and industry trends, spot possible rivals, and develop plans to set themselves apart from the competition.

Support for business planning can also give people or organizations access to knowledge and resources that they might not otherwise have. Based on their knowledge and experience in the field, consultants and mentors can offer insightful counsel. They can also give you access to tools like financial models, industry data, and market research studies, all of which are helpful when creating a thorough business plan.

Finally, assistance with business planning can help people or organizations stay committed to their aims and objectives. They may stay on course and make progress toward their goals by developing a clear roadmap and workable plan, which can support their motivation and commitment to their company even under trying circumstances.

The Types of Business Plans

Depending on the kind and stage of their company, entrepreneurs may need to draft a variety of business plans. We will examine various business plan formats and their functions in this section.

Startup business plan:

When launching a new company, entrepreneurs create a startup business plan. It outlines the company’s goals, its target market, its offerings of goods and services, its marketing strategies, its projected financial position, and its management team. A startup business plan serves as a roadmap for the growth and development of the firm and is required in order to secure funding from investors.

Internal business plan:

Written only for internal use, an internal business plan is not meant to be shared with external parties such as investors or lenders. It outlines the goals of the organization as well as its strategies and tactics for achieving them. The team adopts an internal business plan to organize efforts and ensure that everyone is working toward the same objectives.

Strategic business plan:

A long-term strategy outlining the company’s objectives and methods for accomplishing them is known as a strategic business plan. It directs the company’s expansion and growth over three to five years. It could also have a plan for accomplishing the company’s objectives, a SWOT analysis, a market study, and financial projections.

Operational business plan:

An operational business plan describes how the company will run daily. It contains information on the company’s supply chain, inventory control, and customer service procedures. To guarantee the company’s operations are successful and efficient, an operational business strategy is necessary.

Growth business plan:

When a business decides to grow, a growth business plan is developed. It describes the techniques and tactics the business will employ to grow, such as the creation of new products, foraying into untapped markets, and the acquisition of rival businesses. Financial predictions and a strategy for accomplishing the company’s growth goals may be included in a growth business plan.

Feasibility business plan:

A feasibility business plan is produced to assess the viability of a new business idea. A SWOT analysis, financial estimates, and a market study are all included. A feasibility business plan is used to determine whether a business idea is viable and has a chance of succeeding.

One-page business plan:

A standard business plan is condensed into a one-page document. The mission statement, product or service offerings, target market, marketing plans, and financial predictions are all included. For business owners seeking a quick and simple approach to pitching their venture to investors, a one-page business plan is perfect.

The Key Elements of a Business Planning Support

A good business planning support consists of several key elements, which are:

The Key Elements of a Business Planning Support

The Key Elements of a Business Planning Support

Executive Summary:

The executive summary outlines the company’s goals and business plans. Its importance cannot be emphasized because it creates the first impression of the company in the readers’ minds, potentially affecting their attitudes later on in terms of consumers and investors.

Business Description:

A thorough business description makes the procedures, organization, positioning, and products of the company clear. It also emphasizes the products’ or services’ unique selling proposition (USP), which sets the business apart from its rivals in the market.

Market Analysis in Business Planning Support:

A detailed market study can be used to assess the existing position of the company and its potential for growth in the future. It makes educated judgments about investments, marketing, distribution, and competitiveness easier with its aid.

Operations and Management:

This section explains how the company runs and provides top-notch goods or services in a timely and cost-effective manner. It highlights the company’s distinctive selling propositions and competitive advantages.

Financial Plan:

The financial plan, which is primarily intended for investors and sponsors, is the most important component of a company plan. It contains information on the firm’s financial guidelines, market analysis, historical results, forecasted outcomes, and estimated value. Possible inclusion requirements might include a five-year financial report.

Remember that the exact order and specific content of these elements may vary based on the business type and the intended purpose of the plan. Nonetheless, these are the fundamental components that every good business plan should contain.

Magistral’s Services on Business Planning Support

We provide services for business planning support in the following categories:

Magistral’s Services on Business Planning Support

Magistral’s Services on Business Planning Support

Industry Trends in Business Planning Support:

Monitoring and evaluating both established and new trends within a given industry is part of providing business planning support for industry trends. By using this service, businesses may stay informed about the most recent advancements in their sector and modify their strategy as necessary. Businesses can discover possible opportunities, risks, and problems that could affect their operations by knowing industry trends. Attending industry conferences and events, examining market data to spot trends and patterns, and studying industry reports are some examples of the services that may be provided.

Market Research and Analysis:

An essential part of the support for business planning is market research and analysis. To assist organizations in making wise decisions, it entails gathering and evaluating data about the market, clients, and rivals. This service aids companies in determining the wants and preferences of their customers, comprehending their target market, and evaluating the competitors. Surveys, focus groups, data analysis, and other methods of information gathering and analysis may be used in market research and analysis. Effective product development plans, pricing strategies, and marketing tactics can all be created using the research’s findings.

Growth Opportunities:

Opportunities for company growth are possible paths toward development and expansion. With the aid of business planning, companies identify and assess new products, services, and markets that enable them to achieve their expansion objectives. This service includes the identification of potential development areas through market research and analysis, the assessment of the viability of expansion plans, and the development of new market entry strategies. Growth prospects also include corporate development programs, mergers and acquisitions, and strategic alliances that help organizations reach their expansion objectives.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

 

 

Introduction

Private equity funds have gained significant prominence in the realm of finance and investment, playing a vital role in the broader private equity industry. These funds specialize in investing in privately held companies or acquiring substantial ownership in publicly traded companies.

Functioning as investment vehicles, they amass capital from diverse sources, including institutional investors, high-net-worth individuals, and pension funds. Skilled investment professionals known as fund managers or general partners are responsible for managing this capital.

The primary aim is to generate substantial returns for their investors. They achieve this objective through active management and strategic decision-making concerning their investments. Unlike public equity investments that involve trading shares on public exchanges, private equity funds take a longer-term approach and actively participate in nurturing the growth and development of the companies they invest in.

To summarize, private equity funds serve as investment vehicles that pool capital from various investors to invest in private companies or acquire significant ownership in public companies. Operating with a long-term perspective, these funds actively manage their portfolio companies and strive to generate attractive returns through strategic decision-making and value creation.

Types of Private Equity Funds

Private equity funds encompass a diverse range of investment strategies, each catering to specific market niches and objectives. Here are some common types:

Types of Private Equity Funds

Types of Private Equity Funds

Venture Capital Funds:

The primary goal is to promote high-growth, early-stage businesses with substantial room for expansion. They provide entrepreneurs with financial support, mentorship, and strategic advice in exchange for an equity stake. Typically, these funds focus on biotech, technology, and other innovative industries.

Growth Equity Funds:

Growth equity funds invest in well-established companies that are positioned for expansion and require capital to fuel their growth strategies. These funds seek out companies with proven business models, positive cash flow, and the potential for substantial value creation.

Buyout Funds:

Buyout funds specialize in acquiring controlling ownership in mature companies. Their objective is to improve the operations, efficiency, and profitability of the target companies to generate significant returns. Buyout funds can be further categorized based on the size of the companies they target, such as large-cap, mid-cap, and small-cap.

Distressed/Private Debt Funds:

Private or distressed debt funds make investments in financially distressed businesses or offer debt financing to businesses that might not be qualified for conventional bank loans. Usually, these funds buy distressed debt securities at a discount to restructure the business or make their investment back through asset sales or repayment.

Benefits of Investing in Private Equity Funds

Private equity funds offer a multitude of advantages to investors that surpass those of conventional investment channels. Among them are a few of them:

Portfolio diversification in Private Equity Funds:

Investment portfolios with a higher risk-return profile may benefit from using private equity funds. Private equity investments complement patient capital because of their extended investment horizon, which enables a long-term emphasis on value generation.

Access to high-growth companies:

Private equity funds make investments in businesses at all phases of development, from start-ups to well-established enterprises. Investors get exposed to high-growth, creative enterprises that would not be listed on open markets.

Active involvement:

Private equity funds actively participate in the management and decision-making of their portfolio companies. This hands-on approach allows for greater influence and potential for value creation.

Potential for higher returns:

Funds aim to generate above-average returns by identifying and nurturing promising companies. The illiquidity premium associated with private investments can lead to significant gains if successful exits are achieved.

Challenges of Private Equity Funds

Numerous challenges that private equity firms face might have an impact on their operations and investment results. The following are some major obstacles that they must overcome:

Deal Sourcing and Competition:

A persistent difficulty for private equity funds is locating appealing investment opportunities. The market becomes more saturated with funds, which increases competition and makes it harder to find good offers. Higher competition frequently leads to higher prices and possibly worse returns on investments.

Complexities of Due Diligence in Private Equity Funds:

Complete due diligence on possible portfolio companies is difficult and takes a lot of time. Evaluating private companies’ financial health, market potential, and management teams can be difficult due to the restricted availability of publicly available information. Accurately identifying possible dangers and development possibilities requires thorough due diligence.

Liquidity and Exit Strategies:

Generally speaking, private equity investments are illiquid, which means that money must be held for a long time before it can be realized. There is uncertainty associated with the timing and execution of exits because they are dependent on external factors such as market circumstances. Investors’ access to returns and the fund’s liquidity may be impacted by inadequate exit opportunities or departure delays.

Economic and Market Volatility:

The fluctuations in the economy and markets can affect private equity funds. The success of portfolio companies may be impacted by changes in the macroeconomic environment, difficulties unique to the sector, or unanticipated circumstances. Amidst uncertain times, it becomes imperative to adjust to evolving market dynamics and implement efficient risk mitigation strategies.

Through recognition and proactive resolution of these obstacles, private equity funds can endeavour to enhance their efficacy, produce appealing returns for stakeholders, and sustain their pivotal position in the worldwide investment terrain.

Magistral’s Services on Private Equity Funds

Our speciality lies in providing private equity firms with thorough advice and insights. Having extensive industry knowledge, our team consists of highly skilled people. Collectively, we provide a variety of tailored consulting services to address the unique requirements of investors and private equity fund managers. Our team’s offerings include the following services:

Magistral's Services on Private Equity Funds

Magistral’s Services on Private Equity Funds

Fund Formation and Structure:

Among the services we offer to our clients are assistance with the formation and organization of funds, regulatory compliance monitoring, and optimizing the fund’s operational and legal framework.

Investment Strategy and Deal Sourcing of Private Equity Funds:

We create investment strategies in close collaboration with fund managers to meet their unique goals. We help with deal sourcing, finding good investment possibilities, and doing in-depth due research on potential companies.

Investment Execution and Portfolio Management:

Our team offers expert guidance on investment execution, negotiation, and deal structuring. We assist clients in implementing effective portfolio management practices, monitoring investments, and providing ongoing support to maximize value creation.

Risk Management and Compliance:

We help identify and mitigate potential risks for these funds, ensuring adherence to regulatory requirements and industry best practices. Our services include risk assessment, compliance reviews, and implementation of robust risk management frameworks.

Exit Strategies and Value Enhancement:

We provide strategic advice on exit strategies, optimizing the timing and execution of exit events. Additionally, we offer guidance on value enhancement initiatives to maximize investment returns.

At Magistral Consulting, we combine our deep industry knowledge, analytical expertise, and customized solutions to support fund managers and investors throughout the entire investment lifecycle. We aim to help clients achieve their investment objectives, navigate complexities, and maximize returns in the dynamic realm of private equity funds.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative:

visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

It’s challenging to assess an investment’s potential. Deciding the worth of investments, particularly complex ones, is a recurring problem for private equity and venture capital firms. The process of portfolio valuation is essential for financial reporting and tax implications, and it has an effect on the compensation of investment managers. It entails painstaking computations to analyze every element and produce a thorough evaluation of the overall value of the portfolio.

In addition to its numerical precision, it provides investors with a strategic roadmap that facilitates resource allocation, risk mitigation, and well-informed decision-making within the ever-changing realm of venture capital and private equity. One of the most important financial steps in portfolio assessment is determining the worth of everything you have invested in. Through a meticulous process that involves rigorous math analysis of each component, you will be able to see the entire return on all of your investments. It’s like a map for investors; it’s not just about getting the numbers correct. Understanding the precise value of each investment aids in making financial decisions, managing risks, and implementing astute plan modifications.

The employment of mathematical models, which provide a quantitative basis for understanding the overall health and future performance of the portfolio, is a crucial aspect of this appraisal. The data gathered from this process serves as a guide for prudent investment selections and aids in resource management. By using insights into portfolio value, investors can align their portfolios and assets with evolving market conditions or long-term financial objectives.

To put it simply, portfolio valuation is a flexible instrument that helps investors make informed decisions about their future investments while also reflecting their present financial situation. This allows investors to move confidently and adaptably through the complex world of financial markets.

Understanding the Mechanics of Portfolio Valuation

In the world of investing, especially in businesses and startups, figuring out how much each thing you’ve invested in is worth is like creating a detailed picture of your whole investment collection.

We’re looking at how the market behaves, the little details about how each investment is doing, and a bunch of other factors. It’s like putting together puzzle pieces to understand the value of each thing you’ve invested in.

In this innovative approach, we focus on things like venture capital and private equity firms, which are like partnerships or investments in businesses. Unlike some complicated investments, these have clear and easy-to-understand structures. This makes them stand out and changes how we look at valuing finances. It’s like we’re using new and precise methods to understand the overall value of your investments.

Challenges in Portfolio Valuation

Diverse issues arise in portfolio valuation, necessitating a thorough understanding of focal assets and market dynamics. Managing complex financial environments demands the ability to read economic subtleties, handle difficult situations with tact, use market trend information, and keep an all-encompassing viewpoint. Transparency and careful documenting of valuation procedures become essential in the face of heightened scrutiny.

Challenges in Portfolio Valuation

Challenges in Portfolio Valuation

Mastery in portfolio valuation demands:

A profound comprehension of market dynamics and the focal asset:

A deep understanding of market dynamics and the focal asset is paramount for effective decision-making. This involves a comprehensive grasp of how markets function, the factors influencing the chosen asset, and the interplay of variables that shape its value. This profound comprehension forms the foundation for strategic and informed investment decisions.

Smartly finding your way through complicated money situations:

Astute navigation through complex economic landscapes requires a keen understanding of economic intricacies, policy shifts, and global trends. It involves skilful interpretation of data, the anticipation of market shifts, and strategic decision-making to navigate uncertainties. This expertise is vital for successful investment management in an ever-changing and dynamic economic environment.

Leverage of insights into market trends, risk assessment, and asset behaviour:

Effectively leveraging insights into market trends, risk assessment, and asset behaviour is crucial for informed decision-making. This involves interpreting market signals, assessing potential risks, and understanding how assets respond to various conditions. Such insights empower investors to make strategic choices, optimise performance and mitigate potential challenges in dynamic market scenarios.

Holistic perspective integrating analytical precision with broader economic, financial, and corporate understanding:

A holistic perspective integrates analytical precision with a comprehensive understanding of broader economic, financial, and corporate contexts. This approach involves synthesizing detailed analyses with a nuanced awareness of the larger business landscape, enabling well-informed decision-making that considers the intricate interplay of factors shaping the valuation and performance of portfolios.

Amid heightened scrutiny from regulators, auditors, and investors:

Demand for transparent, consistent, and meticulously documented valuation practices has intensified: The demand for transparent, consistent, and meticulously documented valuation practices has surged. In an environment marked by increased scrutiny from regulators, auditors, and investors, there is a heightened emphasis on practices that enhance visibility, reliability, and thorough documentation, meeting the evolving standards and expectations in the realm of portfolio valuation.

Challenges escalate with market volatility and the dynamic nature of “whimsical” valuations:

The unpredictable fluctuations in market conditions and the subjective aspects of certain valuations add complexity to the landscape, necessitating adaptable strategies and a vigilant approach to effectively navigate and manage risks in a dynamic financial environment.

The evolving landscape includes the impact of the latest AICPA directives on appraising venture capital and private equity investments:

As regulatory frameworks shift, staying abreast of these directives is essential, shaping the methodology and standards for evaluating the worth of these dynamic and unique investment assets.

Magistral’s Services on Portfolio Valuation

We regularly conduct portfolio valuations for our investment management client based in London. We specialize in offering valuable insights and analysis to our clients, aiding them in informed investment decisions for specific funds. Our services include performing risk analytics on the client’s portfolio and calculating annualized returns, volatility, and ratios for individual funds. This comprehensive approach empowers clients to assess and manage risks in their portfolios effectively.

Magistral’s Services on Portfolio Valuation

Magistral’s Services on Portfolio Valuation

Asset Valuation:

We determine fair market values for diverse securities like stocks, bonds, and derivatives, while offering comprehensive risk analytics. Our approach enables clients to assess and manage portfolio risks effectively with calculated returns and ratios.

Risk Assessment:

Evaluating the risk associated with a portfolio is critical. Portfolio valuation services may provide risk metrics such as volatility, beta, and other measures to help investors understand and manage risk.

We evaluate cumulative performance, aiding investors in decision-making and risk assessment. We assess volatility, a statistical measure indicating security or market risk. We use Beta to assess individual asset contributions to market risk, and calculate annual returns, factoring various sources for comprehensive investment performance analysis.

Custom Reporting:

Many portfolio valuation services offer customized reports to meet the specific needs of their clients. This could include tailored performance reports, risk analytics, and other metrics based on client preferences.

The files sent to us by the client in PDF or Word format are converted to Excel files or any other format as requested by the client.

Technology solutions:

We utilize cutting-edge technology solutions, incorporating data analytics, machine learning, and artificial intelligence to boost the precision and efficiency of our portfolio valuation procedures.

Fair Value Measurement:

Some assets may not have readily available market prices. In such cases, portfolio valuation services use various methods to estimate fair values, including discounted cash flow analysis, comparable company analysis, and other valuation techniques.

Valuation of Private Equity and Alternative Investments:

For portfolios containing private equity, hedge funds, or other alternative investments, specialized valuation services may be required. These services often involve complex methodologies due to the lack of publicly available market prices.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

In the present fast-paced and ever-evolving business realm, companies need a profound grasp of their customers, competitors, and market trends. This necessitates the use of top-tier global market research services to obtain invaluable insights and make well-informed decisions that can propel success in a globalized market place. To achieve this goal, global market research services can provide a significant role. These services offer valuable insights into a range of aspects such as consumer behavior, industry trends, market size, and competition.

Global market research services encompass the collection and analysis of data from diverse sources, including surveys, focus groups, interviews, and secondary research. The gathered information is then utilized to equip companies with the necessary information to make informed decisions about their products, services, and overall strategy.

Finding new growth opportunities for businesses is one of the biggest advantages of using worldwide market research services. Companies can create goods and services that are more likely to be successful in the market by taking into account the preferences and requirements of the target market. Additionally, market research can assist businesses in identifying market voids that they can close with fresh goods or services.

Global market research services can also help businesses remain one step ahead of their rivals. Companies can create more efficient marketing and sales strategies that help them beat rivals by examining the tactics of rivals and keeping an eye on market trends.

Services for international market research are also essential for businesses that operate internationally. These offerings help businesses tailor their goods and services to suit regional demands and legal requirements by offering insightful information on cultural variances, customer preferences, and regulatory frameworks in various markets.

Overall, international market research services are essential to assisting businesses to thrive in the modern world market. These services assist businesses in creating more effective strategies and making knowledgeable choices about their goods and services by offering insightful information on customer behavior, market trends, and competition.

Challenges in Global Market Research

Companies that want to thrive in the current global marketplace must conduct global market research. On the other hand, performing market research on a global scale has its own special set of difficulties. We’ll look at a few of the difficulties businesses encounter when conducting international market research in this piece.

Challenges in Global Market Research

Challenges in Global Market Research

Cultural Differences:

One of the most significant challenges in global market research is the difference in cultures. Consumer behavior, preferences, and attitudes can vary greatly between different cultures, making it essential for companies to understand these differences to effectively conduct market research. Companies must consider the impact of cultural norms on the questions they ask and the methods they use to gather data. For instance, certain topics may be taboo in some cultures, and companies must avoid asking sensitive questions that may offend participants.

Language Barriers in Global Market Research Services:

Another challenge in global market research is the language barrier. Companies must be able to communicate effectively with participants in different regions and countries, which may require translation services. Additionally, companies must ensure that translated questions and responses accurately capture the intended meaning. Failure to accurately translate survey questions can lead to misleading results and flawed conclusions.

Regulations and Laws:

Different regulations and laws in different countries can also pose a challenge to global market research. Companies must ensure that they comply with all applicable laws and regulations while conducting research in different countries.

Data Security and Privacy Laws:

Laws about data privacy and security vary in severeness across various nations and are governed by a variety of different statutes. When gathering and using data across borders, businesses must abide by these rules. If you don’t, you risk fines or civil repercussions. Therefore, companies must be aware of the rules and limitations set forth by the law in each nation where they conduct business.

Restrictions on Goods and Services:

Some countries have restrictions on the types of goods and services that can be marketed, which can limit the scope of the research. For instance, certain types of products or services may be prohibited or heavily regulated in some countries, and companies may have to exclude them from their research. Companies must be aware of the regulations and restrictions on marketing different types of products and services in different countries.

Intellectual Property Laws:

Intellectual property laws also vary between different countries, which can pose a challenge for companies conducting research. For instance, some countries may have more lenient intellectual property laws, which can lead to issues such as counterfeiting or piracy. Companies must ensure that they comply with all applicable intellectual property laws to protect their assets and maintain their competitive advantage.

Language Barriers in Global Market Research Services:

Language differences can pose a significant challenge for international market research. Companies must ensure that they can communicate effectively with participants in different regions and countries. They may require translation services to overcome this barrier.

Local Culture:

Different cultures have different norms and values that can affect the research process. Companies must consider cultural differences when designing research questions and methods. They should be careful not to ask questions that may be inappropriate or offensive in a particular culture.

Data Quality of Global Market Research Services:

Data integrity is another problem in international market research. Accuracy, completeness, and regularity of data collection may differ between nations. To ensure that the data gathered is accurate and representative of the target community, businesses must ensure that they have strict quality control procedures in place. To ensure that the data gathered is impartial and representative, businesses must make sure they use the proper sampling methods.

Data Availability and Accessibility:

Finally, another significant challenge in global market research services is the availability and accessibility of data. In some countries, there may be limited access to certain types of data or limited infrastructure for conducting research. Companies must consider these factors when planning their research and be prepared to adapt their methods to local conditions. Companies must also be prepared to use alternative sources of data if the data they need is not available.

Magistral’s Services on Global Market Research

We provide the following Global Market Research Services for businesses:

Magistral’s Services on Global Market Research

Magistral’s Services on Global Market Research

Market Size and Forecasting:

This service helps businesses to estimate the size of their target market and forecast the future demand for their products or services. It includes research on consumer demographics, purchasing patterns, and market trends.

Competitive Analysis of Global Market Research Services:

This service provides businesses with a comprehensive overview of their competitors, including their strengths, weaknesses, market share, and pricing strategies. This can help businesses to identify opportunities for growth and improve their competitive position.

Brand Perception and Awareness:

This service helps businesses to understand how their brand is perceived by consumers and to measure their brand awareness. This can help businesses to identify areas for improvement and develop effective branding strategies.

Customer Satisfaction and Loyalty:

This service provides businesses with insights into how satisfied their customers are with their products or services and how likely they are to remain loyal. This can help businesses to identify areas for improvement and develop effective customer retention strategies. Our strict NDAs ensure confidentiality, fostering smooth and secure operations.

Solve Language Barriers:

We assist in bridging language barriers to ensure outsourced work remains unhindered, fostering effective cross-cultural communication and maintaining work quality.

Market Entry Strategy:

This service helps businesses to identify the best way to enter new markets. It includes research on local laws and regulations, consumer behavior, and competition. This can help businesses to develop effective market entry strategies and minimize risks.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

Amidst the ever-shifting and dynamic competitive businesses, investment banks, and PE/VC enterprises are constantly on the lookout for ways to improve their operational efficiency and secure a strategic edge. These financial institutions operate in that space where exactness, precision, and tailored client relationships are paramount. From small startups to multinational corporations, investors’ CRM has become a strategic asset in enhancing customer satisfaction, increasing revenue, and staying competitive in a constantly evolving marketplace.

Transformations in the Financial Services Arena

The financial industry environment has undergone considerable development and conversion over the course of its history. The firms have adapted to the evolving imperatives of their clients and investors. It’s a necessity. We have been acknowledging these trends and they are:

Unprecedented Capital Acquisition:

Financial institutions have achieved unprecedented levels of capital acquisition, drawing funds from a diverse array of investors, encompassing institutional investors, enterprises, and individuals with substantial wealth. This surge in capital influx has presented both opportunities and complexities in effectively handling investor connections.

Varied Investment Approaches for Investors’ CRM:

These financial entities have broadened their investment approaches, diversifying their portfolios to encompass a wide spectrum of assets and industries. This diversification necessitates robust tools and procedures for the efficient tracking and management of investments.

Global Expansion for Investors’ CRM:

The financial services sector has assumed an increasingly global nature, with firms extending their operations beyond national boundaries. This global expansion has ushered in a fresh set of challenges relating to cross-border compliance, regulatory requisites, and investor relationships.

Expanding Enterprise Sizes through Investors’ CRM:

As financial establishments expand their activities and clientele, they confront the task of managing a larger volume of investor connections and transactions. This growth underscores the importance of streamlined systems to accommodate the augmented workload.

The Role of Investors’ CRM in Financial Services

Investors’ CRM software for private equity, venture capital, and investment banking firms has emerged as a powerful solution to address the ongoing difficulties and opportunities presented by the financial services sector. They are crafted to enable the management of investor relationships, oversee deal pipelines, and enhance data-driven decision-making processes.

Investors’ CRM Features for Financial Services Firms:

Relationship Management:

Investors’ CRM systems enable businesses to efficiently organize and maintain precise information about their customers and leads. This includes contact details, communication history, and individual preferences. Having a centralized repository of this information enables personalized interactions and strengthens client relationships, ultimately leading to enhanced business connections.

Deal Management:

Investors’ CRM solutions provide tools to optimize sales operations, from tracking initial leads to successfully closing deals. This feature enhances sales team communication and increases revenue production by offering a centralized platform for tracking deal progress, assigning tasks, and analyzing sales data.

Sales Funnel Monitoring:

Investors’ CRM systems offer a vital tool for overseeing and managing sales operations – the sales funnel tracking capability. This feature provides a visual representation of potential sales across various stages, facilitating progress monitoring, bottleneck identification, and resource allocation optimization. Ultimately, it enhances revenue generation through refined sales forecasting and informed decision-making.

Data Analysis and Business Insights:

Investors’ CRM software empowers financial firms to extract invaluable insights from their data. Customizable reports and dynamic dashboards enable the tracking of key performance indicators, sales trends, and customer behavior. This data-driven approach empowers organizations to fine-tune their sales and marketing strategies, yielding optimal results.

Workflow Automation:

Investors’ CRM systems automate routine operations and processes, improving efficiency, minimizing manual labor, and ensuring reliable and timely follow-ups. Customizable workflows allow businesses to design unique processes tailored to specific criteria.

Compliance:

Investors’ CRM systems assist companies in adhering to internal guidelines and industry regulations by tracking consumer data, managing consent, and maintaining audit trails. This ensures data privacy and security, upholds ethical and legal standards, and builds trust with customers.

Benefits of Investors’ CRM in Financial Services:

Benefits of Investors' CRM in Financial Services

Benefits of Investors’ CRM in Financial Services

Enhanced Investor Relations:

With a centralized view of investor data and interactions, financial firms can deliver better service, respond to inquiries promptly, and provide personalized updates on portfolio performance. This fosters trust and loyalty among investors, ultimately leading to improved investment outcomes.

Improved Deal Management:

Investors’ CRM systems significantly simplify deal management for financial firms, covering every aspect of the investment process, from due diligence to portfolio management, data entry, and reporting investment returns. This streamlines investment processes and facilitates timely, informed decision-making.

Efficient Workflow:

Investors’ CRM systems automate time-consuming and repetitive tasks, allowing financial firms to allocate resources more effectively and focus on strategic activities. This leads to increased productivity and operational efficiency.

Data-Driven Decision Making:

The data analysis and business insights feature of Investors’ CRM software enable financial firms to make data-informed investment decisions. Customizable reports and dashboards provide a clear view of key performance indicators, helping organizations make strategic choices.

Scalability:

Investors’ CRM systems are scalable and can grow with the firm. Whether a firm is managing a small portfolio or a large, diverse set of investments, Investors’ CRM systems can adapt to accommodate changing needs.

Challenges Faced by Private Equity, Venture Capital, and Investment Banks in Managing Investors’ CRM

Despite the numerous benefits of Investors’ CRM systems, financial service providers face specific challenges that can hinder effective customer relationship management. These challenges include:

Varied Customer Base:

Investment banks, private equity firms, and venture capital companies cater to a diverse clientele, including institutional investors, businesses, and high-net-worth individuals. Each customer category has different needs, requiring specific relationship management tactics.

Data Complexity:

Managing numerous client records from various sources can be overwhelming. Financial firms must track and analyze data ranging from contact details to investment preferences. To address this challenge, a thorough and organized client data management solution is essential.

Magistral’s Services on Managing Investors’ CRM

Magistral Consulting specializes in offering Investors’ CRM services tailored to the unique needs of private equity, venture capital, and investment banking firms. Here are some of the key services offered by Magistral:

Magistral's Services on Managing Investors' CRM

Magistral’s Services on Managing Investors’ CRM

Relationship Categorization:

Magistral’s Investors’ CRM system offers relationship tiering, providing immediate insights into the overall value of each contact or organization. This customization aligns with businesses’ unique requirements, ensuring investor needs and expectations are met and exceeded. Fostering trust and loyalty among investors is crucial for enhancing investment performance, and Magistral’s Investors’ CRM system is designed to facilitate this.

Holistic Communication Insight:

Magistral’s platform centralizes all interactions, including meetings, phone calls, and emails, offering a deeper understanding of deal pipelines, opportunity streams, and competitive positions. By synchronizing all interactions, Magistral helps private equity firms effectively manage and assess crucial connections.

Relationship Oversight and Management:

Maintaining a central database of relationships is essential for managing investor relations effectively. Magistral achieves this by synchronizing all interactions, providing a comprehensive view of all relationships, and facilitating efficient management.

Instant Report Downloads:

Financial services organizations using Magistral’s technology can easily generate complex reports through various platforms, reducing paperwork and expediting deal-making. The tear sheet technology streamlines administrative tasks, allowing firms to focus on strategic activities.

Leveraging Email Marketing:

CRM email marketing tools empower investors to stay informed about portfolio performance and industry updates while identifying fresh investment opportunities. Magistral’s CRM system enables financial firms to establish connections with potential acquisition targets, disseminate relevant industry insights, and maintain engagement with their existing client base through email marketing. Customizable email marketing enhances engagement and fosters trust, ultimately leading to enhanced investment outcomes.

Integration and Tailoring:

Investors’ CRM systems offer integration and customization capabilities, allowing businesses to tailor the software to their specific needs and link it with their preferred third-party applications and data sources. Magistral’s Investors’ CRM system provides a range of third-party integration tools and customization options, enabling businesses to craft a seamless experience that aligns with their unique requirements. Customization features, such as adding columns to visible dashboards, ensure that the CRM solution is precisely aligned with the firm’s distinct needs, enhancing workflow efficiency and effectiveness.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

 

Introduction

Private equity has evolved as a trusted and prominent force in the global financial scene, attracting both high-yielding investors and growing enterprises. Private equity investments have become a crucial route for driving innovation, fueling development, and maximizing shareholder value in a period of rapidly changing markets and disruptive technologies. As the economic climate evolves, new private equity trends shape the industries, impacting investment strategies and offering value creation opportunities.

Private equity trends involve the practice of investing in privately held companies to acquire a majority or significant stake in the company. In line with current private equity trends, firms in this sector adopt a longer investment horizon compared to public markets, facilitating patient funding and a strong focus on growth. This approach aligns with the evolving private equity trends, enabling investors to engage deeply in active management, driving operational enhancements, implementing growth strategies, and fully realizing a company’s potential.

Benefits of Private Equity Investments

Private equity investments have several specific features that make them an appealing alternative for both investors and businesses:

Benefits of Private Equity Investments

Benefits of Private Equity Investments

Capital Injection and Growth:

Amidst current private equity trends, private equity provides companies with access to substantial capital resources, empowering them to embark on expansion projects, finance strategic acquisitions, and invest in research and development (R&D). This injection of capital, in accordance with prevailing private equity trends, can serve as a catalyst for companies, enabling them to not only scale their operations but also venture into new markets, thus expediting their growth trajectories.

Active Management and Operational Expertise:

Unlike traditional investors, private equity firms often play an active role in managing their portfolio companies. They provide extensive industry knowledge, operational skills, and access to a network of resources to these organizations, guiding them towards achieving operational efficiencies, improved financial performance, and a stronger market position. This collaborative approach helps portfolio companies overcome various challenges.

Long-Term Horizon and Strategic Focus:

Compared to public markets, private equity investors have the advantage of a longer investment horizon. Rather than being influenced by short-term market pressures, portfolio companies may concentrate on strategic objectives and sustained growth thanks to this longer-term commitment. Private equity firms can assist companies in putting innovative ideas into practise, investing in them, and laying strong foundations for long-term success.

Interest Alignment: 

Private equity companies frequently co-invest with management teams in order to align their interests and promote a partnership-based strategy. Given that all sides are focused on maximising the value and profitability of the company, this alignment promotes collaboration, responsibility, and strategic decision-making. This convergence of interests establishes a solid base for promoting long-term value development and sustainable growth.

Techniques for Private Equity Trends

Analysts can use a number of strategies to analyze and pinpoint private equity trends. These methods assist businesses and investors in gaining understanding of market dynamics, new opportunities, and potential threats. Here are a few methods that are frequently used to monitor private equity trends:

Research and Data Analysis:

In-depth data analysis and research are essential for comprehending private equity trends. Analyzing macroeconomic statistics, assessing industry-specific data, and reviewing previous investment trends are all necessary for this. Investors can spot new trends and decide wisely by looking at investment data, deal flow, exit activity, and sector performance.

Sector and Industry Analysis:

In-depth analysis enables investors to pinpoint potential hotspots for development and innovation. It entails assessing consumer behaviour, technical improvements, legislative changes, competitive environments, and market dynamics. Investors might have a deeper understanding of the potential and problems within particular businesses by concentrating on those areas.

Peer Group Analysis:

Assessing the performance of portfolio companies and investment targets against that of similar businesses in the same sector might reveal important information. Investors can evaluate financial measures, operational effectiveness, and growth rates through peer group analysis. It enables a thorough assessment of a company’s competitive position and opportunity to create value within a particular industry.

Market Research and Surveys:

These activities might offer qualitative insights into private equity trends. It entails getting input from important stakeholders, market players, and industry experts. Consumer trends, technology disruptions, new markets, and legislative changes can all be from surveys and market research studies.

Collaboration with Consultants and Advisors:

Consulting and advisory firms with private equity experience may be able to offer specialized analyses and insights. These experts can provide market information, assistance with due diligence, and strategic advice. Utilizing their expertise and experience can assist in spotting and taking advantage of private equity trends.

Challenges in the Private Equity Landscape

Many advantages come with private equity investments, but one should also carefully consider their drawbacks:

Challenges in the Private Equity Landscape

Challenges in the Private Equity Landscape

Due Diligence and Risk Management:

Effective risk management depends on thorough due diligence when assessing potential investment possibilities. To make wise investment selections, private equity investors must undertake thorough analysis, review financials, assess market dynamics, and pinpoint potential dangers. Thorough due diligence increases the likelihood of success by reducing potential risks.

Capital Intensity and Financial Leverage: 

Some industries have high levels of financial leverage and are in need for significant capital investments. Capital-intensive tactics can accelerate growth but they also expose portfolio firms to financial dangers. To achieve long-term sustainability and stability, private equity firms must strike a balance between funding expansion ambitions and managing debt well.

Exit Plans and Liquidity: 

Because private equity investments are inherently inert, effective exit plans are frequently necessary in order to realize returns. These could be secondary buyouts, trade sales, or initial public offerings (IPOs). To maximize profits and obtain the correct exit multiples, exit timing and execution are essential. To take advantage of exit possibilities and produce favourable returns for their investors, private equity firms must carefully plan and monitor market conditions.

Magistral’s Services for Private Equity

As a trusted outsourcing partner for research and analytics services, we play a vital role in supporting private equity firms and businesses throughout their investment journey.

Investment Research: 

The team of skilled analysts at Magistral is capable of conducting in-depth investment research and carrying out thorough due diligence on possible targets. They analyse market trends, review prior performance, examine financial documents, and spot potential dangers. With the help of Magistral’s research, private equity companies can make well-informed investment choices that are in line with their investing philosophies and risk tolerance.

Impact Investing and ESG Considerations:

ESG factors are increasingly being taken into account by private equity firms when developing their investment strategy. Magistral can assist in evaluating the ESG performance of possible investments by looking at things like corporate governance, social impact, and sustainability practises. Private equity firms can address the rising demand for socially responsible investing by aligning their investments with ethical and sustainable practises by adopting ESG factors.

Technology & Innovation:

Disruptive innovations and technological developments are transforming industries all over the world. Private equity firms can use Magistral’s research and analytics services to find technology-driven investment possibilities, evaluate market potential, and assess the effects of emerging technologies on portfolio companies. To promote digital transformation within their investments, private equity firms can leverage technological breakthroughs.

Industry-Specific Insights:

Private equity investments are made across many different industries, each with its own dynamics and difficulties. Magistral can offer industry-specific insights and analysis according to their sector-specific experience. Magistral’s research services can be used to assess market trends, competitive landscapes, regulatory frameworks, and growth possibilities within particular industries, including healthcare, technology, consumer products, and energy. This specialized knowledge promotes value development initiatives and improves decision-making.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

 

 

 

Introduction

A start-up pitch deck is a concise summary that provides an overview of your business plan, products, services, and growing success to potential investors or clients. It is often used to convey your vision, value proposition, market opportunity, and essential company characteristics to prospective investors, associates, or stakeholders A start-up pitch deck aims to fascinate and persuade your audience to spark curiosity and support your business idea. A well-designed start-up pitch deck normally comprises several slides covering various elements of your company.

Crafting a compelling startup pitch deck is undeniably one of the most challenging tasks for entrepreneurs. While the overarching objective is to secure funding, the primary aim of the initial presentation is to convince potential investors to extend an invitation for a subsequent meeting. Planning carefully and structuring the components of your start-up pitch deck to convey a compelling story are essential to developing that relationship. Since it’s hard for many firms to stand out in the market due to the enthusiasm and the tough competition for funding, startups need to strengthen their fundraising techniques much more than before.

A start-up pitch deck’s narrative structure is comparable to that of a film trailer in that it sets up the key scenes while maintaining the viewer’s attention and enthusiasm. Start-up pitch decks can be delivered in person or emailed to prospective investors and clients. The most effective technique to make sure a possible partner has gone through all the slides in your start-up pitch deck is often to present it. Additionally, it offers you the chance to respond to any quick queries they may have.

Components of an Effective Start-up Pitch Deck

To effectively convey the value proposition, market opportunity, and development potential of a start-up, a pitch deck typically contains several essential components. Keep your start-up pitch deck brief, focused, and interesting. To hold the attention of your audience and make a lasting impression, each component should be presented simply and persuasively.

Components of an Effective Pitch Deck

Components of an Effective Pitch Deck

The following are crucial components to take into account when designing your start-up pitch deck:

Problem Statement

A pitch deck’s problem statement establishes the context for your company or project by identifying the problem or obstacle that your solution attempts to solve. Clearly state the issue or pain point that your start-up is attempting to solve. Describe the problem’s importance and its effects on your target market.

Solution

Describe the product or service you are offering to solve the issue. Explain how your startup will solve the cited issue and the ways your product or service meets the needs of your target market.

Unique Value Proposition

To stand out from other businesses, emphasize your start-up’s distinctive features, price, or market positioning. Express how you possess a competitive advantage.

Sales and Marketing Strategies

Explain your customer acquisition and marketing techniques. Describe your strategy for attracting and contacting your target market. Discuss your predicted growth trajectory, customer acquisition cost (CAC), and methods of marketing. Discuss probable difficulties and their solutions.

Achievements and Success

Highlight the significant accomplishments, landmarks, and engagement your startup has attained. Display important indicators like user growth, revenue, partnerships, and customer acquisition.

Team Introduction

Include a picture of your squad as a whole to start. As a result, a visual connection is made and your company becomes more personable. Elaborate on your founding group and significant players. Emphasize their background, skills, and experience that are pertinent.

Graphics and Style

Include images, charts, graphs, and other visual components to improve and aesthetically appeal your presentation. Make sure the layout is clear, unified, and simple to read.

Investment Ask

Your start-up pitch deck should end with a compelling call to action. Whatever you desire from your audience – an investment, a collaboration, or additional discussions – express it in clear terms. Include any prospective exits or liquidity events as well as the investment arrangements, such as equity or debt.

Benefits of a Well-Crafted Start-up Pitch Deck

When conveying their business ideas and looking for funding or partnerships, startups, and entrepreneurs can benefit from using pitch decks in several ways. It makes presentations clear and interesting, grabs audience interest, and raises the possibility of winning partnerships or funding.  Here are a few major advantages of a well-designed start-up pitch deck:

Benefits of Well-Crafted Pitch Deck

Benefits of Well-Crafted Pitch Deck

Concise Information:

It makes complicated information easier to understand for your audience by condensing it into simple slides. It offers a clear and short overview of your business endeavor, enabling you to articulate your mission, value proposition, and market potential.

Organized Presentation:

They navigate you through crucial elements like the problem statement, solution, market opportunity, and financial projections to make sure you address every important facet of your enterprise.

Graphical Representation:

You can concentrate on the most important elements of your company or project by using a pitch deck. You can successfully demonstrate your main ideas with the help of visual components like charts, graphs, and photographs in pitch decks.

Drawing Interest:

Potential investors or partners can be attracted by a visually stunning start-up pitch deck with an engaging tale. You can get their attention and leave a lasting impression by using eye-catching pictures, graphics, and clear messaging.

Demonstrating Market Potential:

You may show investors how market research, sales volume, market trends, and target markets can help your company grow and become more appealing.

Feedback and Refinement:

Stakeholder input and insights are obtained when your start-up pitch deck is shared. Your business model, value proposition, and presentation may benefit from this input, which may eventually increase your chances of success.

Magistral’s Start-up Pitch Deck Designing Services

Our team has worked on a variety of pitch decks over the years, some of which have been used to raise money for private equity funds, find co-investors, pitch real estate investments, and exit portfolio companies for incubators.

For a fundraising round to be successful, the entrepreneur’s whole business concept must be presented in the investor pitch. It should include all branding elements, such as colors and logos. Financial projections should include explicit descriptions of revenues, expenses, valuation, and marketing strategies, as well as estimations for client acquisition costs. Only then can the start-up pitch deck appeal to your target market, which is made up of angel investors or VC funds. There are usually some recurring elements in the start-up pitch deck that help it succeed on the roadshow.

Magistral Consulting has supported the fund-raising activities of numerous enterprises, including Private Equity, Venture Capital, Investment Banks, and Asset Management companies.

For our clients’ fundraising endeavors, some of the services that we provide are:

-Create Logos and Websites

-Start-up pitch decks

-Develop Project Plans

-Industry reports

-Financial Modeling

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative: visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

Fundraising is a tool to achieve a collaborative dream. It is the spark that ignites change. So, if you are looking for fundraising, this article will surely clear all your queries. This article also concentrates on the interaction that we follow for startups and organizations hoping to raise support fundamentally through selling some equity.

Private Equity is a capital investment firm that is not listed on any public stock exchange, and the risk involved is low and is required for the expansion of business and growth of the firm. A venture capital fund is generally invested in the initial stage by the individual or investor, which helps the company grow in the initial period. According to the survey, 51% of startups said that their next source of funds was venture capital. The funding starts from bootstrapping, in which one can use their own money or family, or friend’s money. The other method of funding is through the seed round where angel investors are available for the seed funding.

Importance of Fundraising

Fundraising plays a crucial role for the startup. It can increase visibility and attracts the attention of the market. It can get additional value from the investor. Lack of capital is the main reason for the failure of many small businesses. To reach a larger audience in the market and compete with the other players, businesses need money to grow and increase their sales and marketing efforts. In today’s time, there is a positive trend in startup business funding.

Five Steps of Fundraising are:

Steps in Fundraising for Venture Capital or Private Equity Fund

Steps in Fundraising for Venture Capital or Private Equity Fund

Build up the firm

Before starting the fundraising, the firm should build up its profile, improve its website, strengthen its online presence on social media, and check its marketing toolkit and legal structure. It will not raise the fund if the firm is a proprietary company, partnership company, or limited liability partnership. Only the private limited company gets the funding from the PE or VC firm. So first, one must correct the legal structure of one’s business for raising funds and then build the core team, hire the advisory board, and invest in a graphic designer to make the website and business logo. Any limited partner prefers to see a strong portfolio and professional presence of the company.

Private placement memorandum

It is a legal disclosure agreement prepared by the companies and given to an investor for their capital. Creating a private placement memorandum is also essential for the investor. It mainly focuses on gaining long-term capital appreciation through the control investment. This document must include a detailed message about the athletic background, investment strategy, opportunity, and risk.

Research and analysis

Comprehensive research about market reach, market size, and the number of potential customers is done. What is a company’s breakeven, return on investment, and how much is the revenue and profitability of the company? The company vision and plan should be clear. The company should prepare a budget sheet and prepare certain specific questions related to the budget sheet which the investor may ask. The company should check all the financial and legal details before reaching out to the investor. The company should influence how the firm has a competitive advantage and how it will optimize the resources and use it in the best possible way. It also involves doing detailed research and finding the right investors according to one’s industry. Many investment bankers provide investment to the firm, so finding the right investor according to your business is essential. One will easily raise the fund when one gets the right kind of investor, Consequently the company valuation will also increase.

Pitch deck

This is a document where the company should prepare the details about the team member, the company, competition, business model, financials, plans to expand, patent, strategy, etc. and then it is presented to the investor. The pitch deck should be attractive so that investors agree to invest in the business. It must include the return on the investment and how one can expand the company, and future income projections. The investor should see the profitability and the scope of the companies he will prefer to invest in. The goals and objective of the fund, why investment is needed, and where you will support the amount should be clarified. A competitive landscape, marketing opportunities, and detailed information about the shareholder should be necessary.

The investor needs to know how the company’s valuation will grow. The format of the pitch deck should be significant. The pitch to the investor should be professional. The companies should prepare before giving a final rise to the investor so that the last pitch to the investor should be appealing and realistic.

Due Diligence

It is the investigation and review performed to check the process of all the financial and legal documents produced before the investor. The investor should verify all the company’s claims and evaluate the business, check the economic situation, compound annual growth rate, liquidity ratio, profit margin, previous loan, or funding. Due diligence is a necessary process, and the company should clarify or answer all the doubts and questions of the investor. The company should arrange all the documents before going to the investor pitch and do due diligence because if the company misses any records, the funding may not be approved. In this process, the company signs a binding agreement.

Due Diligence process:

A due diligence process is an organized checklist to analyze the company ownership and organization, financial ratio, legal documents, shareholder value, future growth potential, and management. These documents are mandatory for a smooth process and should be prepared before starting the fundraising process.

Due Diligence for Private Equity

Due Diligence for Private Equity

The due diligence package includes the following documents:

-Subscription agreement

-Summary of the contract

-Name of the advisor to the fund

-Sample report

-Asset allocation

-Estimated timeline

-Investment transaction

-Management references

-A pipeline of deals

-The risk mitigation

-Conflict of interest.

Term Sheet

The term sheet includes all details related to the terms and conditions of the agreement. It is issued by the investor, in which detailed information about the company valuation, percentage stake, investor commitment, and liquidity preferences, the right of both parties, how much capital should be invested are mentioned.

The shareholder agreement is also issued, which is the detailed version of the term sheet that mentions all the details of the duties, right, jurisdiction, and arbitration of the company. The share subscription agreement should also explain the share and company stake terms.

These documents should be made so that it does not lead to a legal battle if any. Negotiation is also crucial. The investor generally negotiates more to cut the company’s valuation. The firm should take care of that. Investor relations also play an essential role and set the company’s credibility. If the relationship is good, then it may attract the other investor. The company should also explain the report, growth, and the new project to the existing investor. So, if the company is invested in the relationship, it will undoubtedly benefit in the long run.

 The five steps, as mentioned above, are simple to raise funds. Raising money through venture capital and private equity in series funding is mentioned in the article. Generally, raising funds for the first time for a startup is quite tricky, and it needs a good network, so outsourcing the fundraising support is needed.

Magistral’s Services on Fundraising

 Magistral consulting offers solutions in the following categories –

Fundraising Documentation

Magistral consulting prepares all documents that are helpful in fundraising. It also includes polishing the material to ensure the papers’ standards and design.

Magistral’s investor database

Magistral consulting database help to find the right kind of investor. There are more than 25K+ records of investors.

Specialized lead generation

For business-to-business development particular lead generation program is generated.

Analyst support

Magistral consulting ensures analyst support at every fundraising step. 

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

In the ever-changing world of global financial markets, one term stands out as crucial and has gained significant attention recently: the “Initial Public Offering” or IPO. An IPO marks a major shift for a company, changing it from privately owned to publicly traded. In this discussion, we will delve into the world of Global IPOs, exploring their importance, the trends that influence them, and the role of Magistral Consulting in guiding companies through this complex process.

Understanding Global IPOs

Global Initial Public Offerings (IPOs) encompass a multifaceted process through which companies actively seek to secure funding from the expansive arena of public markets, subsequently positioning themselves for trading on a global stage across a diverse array of international stock exchanges. This strategic decision ushers in a pivotal juncture where companies, with the allure of becoming publicly traded entities, engage in a sophisticated dance of financial dynamics. By embarking upon this transformative journey, businesses open themselves up to an intricate web of opportunities, drawing the attention and investment interest of a wide-ranging spectrum of investors. This, in turn, serves to broaden the canvas of ownership, infusing the enterprise with a newfound sense of dynamism and engagement from a globally dispersed shareholder base.

Investors who enthusiastically participate in this orchestrated financial ballet, by acquiring shares through an IPO, not only align themselves with the company’s trajectory of growth and expansion but also position themselves to reap potential rewards in the form of dividends and capital appreciation. The act of going public extends beyond a mere financial maneuver; it is akin to the unfolding of a strategic narrative. It involves a deliberate orchestration of steps, much like a carefully choreographed performance, where the curtains rise not only on the company’s presence within the marketplace but also on its credibility, visibility, and valuation.

This strategic pivot radiates its influence beyond the immediate financial realm, sending ripples that reverberate across the entirety of the company’s operational landscape. By transitioning into the public sphere, the company not only taps into the wellspring of capital infusion but also gains an amplified voice within the commercial arena. This elevated platform paves the way for increased brand recognition, robust networking, and an enriched ability to execute strategic initiatives that might have been constrained in a private domain. In essence, an IPO acts as a fulcrum upon which the company’s potential and aspirations are poised to be dynamically leveraged, setting the stage for an evolutionary journey that extends far beyond the moment of listing.

The Importance of Global IPOs in Today’s Economy

In the ever-changing landscape of the global economy, the Initial Public Offering (IPO) emerges as a dynamic gauge of market sentiment and a window into the overall economic vitality. This strategic move undertaken by a company to transition into the public sphere signifies not only a profound vote of confidence in the market’s receptiveness to its products or services but also an assertive commitment to propel itself toward growth, foster innovation, and enhance its competitive stance on the global stage. Importantly, the impact of Global IPOs extends beyond the financial realm, as they serve as catalysts for job creation, playing a pivotal role in the economic advancement of regions and nations. Moreover, the significance of IPOs reverberates through the corridors of technological progress, as the capital injection they provide empowers companies to embark on audacious technological journeys, culminating in pioneering breakthroughs that ripple across various sectors, contributing to the advancement of industries and the broader economic landscape.

Trends in Global IPOs

In the intricate realm of global Initial Public Offerings (IPOs), various factors come together to shape their course. These factors span economic shifts, regulatory transformations, and the ever-evolving preferences of investors. Recent trends within the IPO landscape bring to the forefront several noteworthy facets:

Trends in Global IPOs

Trends in Global IPOs

Influence of Technology

A conspicuous trend within the world of IPOs is the prominence of technology-focused companies. This category encompasses both burgeoning startups and established industry giants. The current IPO landscape bears witness to a surge in these technology-driven enterprises. Innovations spanning artificial intelligence (AI), biotechnology breakthroughs, and the pursuit of sustainable energy solutions have galvanized this trend. Such pioneering advancements serve as magnets, attracting investors with a keen interest in being part of transformative progress.

Embracing Global Horizons

In recent times, a notable shift has emerged as companies increasingly opt for cross-border listings. This strategic move enables them to transcend geographical boundaries, tapping into a wider array of potential investors. This approach not only diversifies their investor base but also bolsters liquidity, thereby contributing to a more dynamic IPO experience. This trend resonates with the profound interconnectedness of global markets, recognizing that successful IPOs transcend local confines.

Ethical Considerations Take Center Stage

Environmental, Social, and Governance (ESG) factors have assumed a central role in the narrative of IPOs. Companies that display robust ESG credentials stand out in today’s IPO landscape. Their commitment to ethical and responsible business practices resonates strongly with socially conscious investors. This alignment with sustainable values goes beyond the immediate IPO phase, fostering a trajectory of lasting and meaningful value creation.

Novel Pathways Unfold

The horizon of IPO options has expanded with the emergence of alternative avenues. Special Purpose Acquisition Companies (SPACs) and direct listings offer innovative paths to going public. SPACs, in particular, have garnered attention for their capacity to merge IPO aspirations with merger and acquisition strategies. Direct listings, on the other hand, promote transparency and autonomy, enabling companies to communicate directly with discerning investors without intermediaries.

In this multifaceted landscape, these trends underscore the dynamic nature of global IPOs. As companies navigate these shifts, they do so within a framework that reflects technological advancements, embraces global interconnectivity, upholds ethical considerations, and explores innovative IPO pathways. These trends collectively contribute to shaping a future where IPOs not only signify financial milestones but also serve as vehicles for broader economic and societal progress.

Magistral Consulting: Guiding the IPO Journey

In the intricate world of Global IPOs, Magistral Consulting stands out as a trusted guide for companies entering the public arena. With a team of experienced professionals, Magistral offers comprehensive services tailored to expedite and optimize the IPO process:

Magistral Consulting's Global IPO Services

Magistral Consulting’s Global IPO Services

Strategic Planning

At Magistral Consulting, we work closely with our clients to develop a carefully tailored IPO strategy that takes into account the company’s level of readiness and the ever-changing dynamics of the market. Our collaborative approach ensures that every step is well thought-out, aligning with your goals and maximizing your chances of a successful IPO debut.

Financial Expertise

Our team of financial experts at Magistral Consulting is dedicated to ensuring that your IPO journey is smooth and compliant with all necessary regulations. With a deep understanding of the financial landscape, we meticulously guide you through strategic pricing decisions that resonate with investor expectations, laying a solid foundation for your company’s future growth.

Global Insights

In an interconnected world, Magistral Consulting offers invaluable insights into international markets, providing you with the knowledge needed to make informed choices regarding where to list your company. Our global perspective equips you with the tools to assess various listing locations and make decisions that align with your expansion goals.

Regulatory Support

Navigating the intricate web of regulations can be overwhelming, but with Magistral Consulting by your side, you can navigate the regulatory landscape with confidence. Our seasoned experts bring a wealth of experience to guide you through the complexities, ensuring that your IPO process remains compliant and efficient, reducing any potential roadblocks.

Investor Relations

Cultivating strong relationships with investors is essential for post-IPO success, and Magistral Consulting excels at crafting compelling narratives that resonate with your investors’ interests. By fostering meaningful connections through effective communication strategies, we set the stage for enduring partnerships that contribute to the long-term growth and prosperity of your company in the public domain.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

 About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

Introduction

A syndicated loan is a financing arrangement where a group of lenders pool their resources to provide a substantial amount of capital to a single borrower. This collaboration allows borrowers, often corporations or governments, to access large sums of money that might not be available through a single lender. Syndicated loans typically involve a lead bank, known as the arranger, which structures and coordinates the loan while also underwriting a portion of it.

In the dynamic realm of finance, syndicated loans emerge as a formidable force, fueling growth, propelling enterprises, and forging alliances between lenders and borrowers. At Magistral Consulting, we delve into the intricacies of syndicated loans, unraveling the syndication process, exploring their manifold benefits, addressing potential risks, and assessing their significance in modern finance.

Types of Syndicated Loans

Following are the types of syndicated loans:

Term Loans

A term loan is a type of syndicated loan with a fixed repayment schedule over a predetermined period, usually ranging from several years to decades. It is often used for long-term financing needs, such as capital expenditures, acquisitions, or infrastructure projects.

Revolving Credit Facilities

A revolving credit facility provides the borrower with a maximum credit limit that can be borrowed, repaid, and borrowed again during the term of the facility. This type of syndicated loan is suitable for short-term working capital needs and provides flexibility in managing cash flows

Syndicated Working Capital Loan

Similar to a revolving credit facility, this type of loan helps fund a company’s ongoing operations, such as covering operating expenses and managing short-term liquidity needs.

Bridge Loans

A bridge loan is a short-term syndicated loan used to provide interim financing until a more permanent source of funding can be secured. It’s often used in scenarios like mergers and acquisitions, where the borrower needs immediate funds while awaiting long-term financing.

Project Finance

A movement of vision and promise, project finance is a harmonious partnership between financing and specific initiatives. The future cash flows, a melodic collateral, resonate as the heartbeat of this financial symphony.

Mezzanine Loan

Mezzanine loans combine features of debt and equity financing. They often have a higher interest rate and provide the lender with the option to convert their debt into equity under certain conditions.

Global Syndicated Loan

This type of loan involves lenders and borrowers from different countries. It’s often used by multinational corporations to access funding across various jurisdictions.

Leveraged Loan

Leveraged loans are extended to companies with high levels of debt or weaker credit profiles. They are often used for leveraged buyouts (LBOs) and other acquisitions where the borrower’s financial leverage is high.

Dual Tranche Loan

A dual tranche loan consists of two separate tranches with different terms, interest rates, or currencies. This allows borrowers to tailor the loan to their specific needs.

Process of Syndicated Loans

Initiation and Structuring

The overture begins when a borrower seeks substantial funding. The lead arranger takes center stage, assessing the borrower’s creditworthiness, discerning the loan’s purpose, and composing the symphony of terms. Here, the loan’s structure takes shape, encompassing interest rates, repayment schedules, and covenants – the foundational notes of the lending arrangement.

Inviting Lenders

The spotlight then shifts to the arranger, who extends invitations to other financial institutions, often esteemed banks, to join the ensemble. Each lender contributes their melodic investment, a harmonious fusion of risk appetite and capacity, culminating in a crescendo of capital.

Due Diligence

Interested lenders conduct due diligence on the borrower’s financials, business operations, and the purpose of the loan. This helps lenders assess the borrower’s creditworthiness and the associated risks.

Agreement and Documentation

Legal documents are being prepared, including the credit agreement, term sheet, and security documents. These documents spell out the loan’s terms, the lender’s rights, and the borrower’s responsibilities. The final terms of the loan documentation are negotiated by lenders, the lead arranger, and the borrower. Before signing, all parties must review and approve the documents.

Loan Disbursement

Once all conditions precedent are met (such as regulatory approvals), the loan amount is disbursed to the borrower. he administrative agent (often the lead arranger) monitors the loan’s compliance with covenants and repayment terms. Regular communication between the borrower and lenders is maintained through reporting and updates.

Benefits of Syndicated Loans

Following are the benefits of syndicated loans:

Benefits of Syndicated Loans

Benefits of Syndicated Loans

Access to Capital

Syndicated loans allow borrowers to access a significant amount of capital that might be beyond the lending capacity of a single financial institution. This is particularly beneficial for large corporations or projects that require substantial funding. Lenders participating in a syndicated loan can spread their exposure across multiple borrowers and industries, reducing the impact of defaults from individual borrowers on their overall portfolio.

Diversification

Syndicated loans involve multiple lenders, diversifying the sources of funding. This reduces the borrower’s dependence on a single lender and mitigates the risk of disruption if one lender faces financial difficulties. The loans often involve lenders from different geographical locations, allowing them to tap into new markets and industries they might not have direct access to otherwise.

Risk Sharing

Since the loan is spread across multiple lenders, the borrower’s risk exposure is shared among the participating financial institutions. This can be especially advantageous in managing the potential credit and default risks. Also, the collective voices of multiple lenders harmonize, creating a buffer against the potential impact of borrower default

Flexibility

By dealing with a syndicate of lenders, borrowers can save time and effort that would be required to negotiate with multiple lenders individually. Syndicated loans allow lenders to participate in larger loan transactions that might exceed their individual lending limits, enabling them to compete for larger deals.

Efficiency

Lenders can deploy their capital more efficiently by participating in syndicated loans, as they can choose loans that align with their risk appetite, return expectations, and expertise. They collaborate in syndicates, pooling their expertise and insights to assess the creditworthiness of the borrower and structure the loan appropriately. This collective effort can lead to better-informed lending decisions.

Magistral’s Services for Syndicated Loans

In the dynamic and ever-evolving landscape of finance, syndicated loans have emerged as a symphony of collaboration, orchestrating harmonious partnerships between borrowers and lenders. At Magistral Consulting, we stand as experts, guiding you throughout the process of syndicated loans, offering a range of services designed to unlock opportunities, mitigate risks, and harmonize success.

Magistral's Services for Syndicated Loans

Magistral’s Services for Syndicated Loans

Structuring and Arrangement

Our seasoned experts at Magistral Consulting possess a profound understanding of the initiation and structuring phase of syndicated loans. We work closely with borrowers to comprehensively evaluate their financial needs and goals, crafting a harmonious loan structure that resonates with their objectives. Our lead arrangers ensure that every note, from creditworthiness assessment to covenant formulation, is meticulously tuned to create a symphony of terms that strike the perfect balance between risk and reward.

Lender Invitation and Collaboration

Inviting lenders to join the symphony requires a delicate touch and a keen ear for harmonizing risk appetites and capacities. Magistral Consulting excels in this art, carefully curating a consortium of financial institutions that share your vision. We orchestrate the lender invitation process, ensuring that each participant contributes their unique note to the melody, enriching the arrangement and enhancing the collective impact.

Due Diligence and Risk Mitigation

Due diligence is the foundation of well-informed decision-making and risk-reduction in the world of syndicated loans. Our professionals engage in a complex financial movement, probing the borrower’s resources, prospects for the business, and capacity for payback. This detailed analysis not only protects lenders but also gives borrowers more leverage by boosting their trustworthiness and removing uncertainty’s contradiction.

Documentation and Legal Harmonization

The legal documents for the work of syndicated loans must be properly drafted to specify each participant’s obligations and rights. To lay the groundwork for seamless exchanges between borrowers and lenders, Magistral Consulting makes sure that everything works efficiently. Our legal specialists write a thorough agreement that captures the spirit of cooperation while defending the interests of each party.

Efficient Loan Disbursement

The work comes to life at the apex of loan distribution. Magistral Consulting manages this critical moment with its experienced lead arrangers, ensuring a smooth and quick movement of cash. We operate as the primary point of contact, promoting amicable communication between the borrower and the syndicate and allowing efficient loan disbursement.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

Introduction

Portfolio Management in the context of private equity (PE) involves the active management and oversight of a collection of investments in privately held companies. Private equity firms raise funds from investors, such as institutional investors, pension funds, and high-net-worth individuals, and use these funds to acquire ownership stakes in companies with the goal of enhancing their value and ultimately generating attractive returns.

Portfolio Management in the context of venture capital (VC) involves the active management and oversight of a collection of investments in early-stage startups and emerging companies with high growth potential. Venture capital firms provide funding, mentorship, and strategic guidance to these startups to help them scale and succeed.

Overall, it involves overseeing and optimizing a collection of investments in privately held companies. The goals of portfolio management in these fields differ from traditional asset management due to the unique characteristics of private investments.

How Portfolio Management works in Venture Capital

Investment Thesis and Focus:

Venture capital firms define their investment thesis, which outlines the types of startups they are interested in funding. This includes the industries, technologies, and business models that align with the firm’s expertise and strategic goals.

Deal Sourcing and Screening in Portfolio Management

Portfolio managers actively seek out investment opportunities by sourcing deals through networks, referrals, pitch events, accelerator programs, and other channels. Startups are screened based on their market potential, innovative solutions, founding team, and growth trajectory.

Investment Decision

After evaluating potential investments, portfolio managers decide which startups to fund. This decision involves assessing the startup’s business plan, market opportunity, competitive landscape, and scalability.

Investment Terms and Negotiation:

Portfolio managers negotiate the terms of investment, including the equity stake the VC firm will receive in the startup, the investment amount, and any additional rights or preferences.

Value Addition and Mentorship:

Venture capital firms provide more than just capital; they offer mentorship, guidance, and strategic support to help startups navigate challenges and accelerate growth. Portfolio managers might assist with product development, market entry, business development, and talent acquisition.

Follow-on Investments:

Successful startups often require multiple rounds of funding as they grow. Portfolio managers decide whether to participate in follow-on investment rounds to maintain their ownership stake and support the startup’s continued growth.

Exit Strategy in Portfolio Management

Venture capital firms plan exit strategies to realize returns on their investments. Exits can occur through acquisition by larger companies, mergers, or initial public offerings (IPOs).

Risk Management in Portfolio Management

Startups inherently carry a high level of risk, and portfolio managers assess and manage these risks by closely monitoring the startups’ progress, addressing challenges, and making adjustments as needed.

Performance Monitoring and Reporting:

Portfolio managers continuously monitor the financial and operational performance of their portfolio companies and provide regular updates to their investors.

Fundraising and Investment Strategy:

Private equity firms raise funds from investors, creating a pool of capital known as a private equity fund.

The firm outlines its investment strategy, which includes the types of companies it intends to invest in, the industries it will focus on, the geographic regions of interest, and the anticipated investment timeline.

How Portfolio Management works in Private Equity  

How Portfolio Management works in Private Equity

How Portfolio Management works in Private Equity

Deal Sourcing and Due Diligence:

Portfolio managers actively seek out investment opportunities by sourcing deals through various channels, including networking, industry connections, and proprietary research. Due diligence is conducted to thoroughly assess the target company’s financials, operations, market position, competitive landscape, growth prospects, and potential risks.

Investment Decision  of Portfolio Management

Based on the findings of due diligence, portfolio managers decide whether to invest in the target company and negotiate the terms of the investment, including the purchase price, equity stake, and governance structure.

Value Creation:

After acquiring a company, private equity firms work closely with the company’s management team to implement strategic initiatives aimed at improving operations, increasing efficiency, expanding market share, and driving growth.

Streamlining operations, entering new markets, introducing new products or services, and optimising the capital structure are all examples of value creation strategies.

Active Ownership and Operational Involvement:

Private equity portfolio managers take an active role in the companies they invest in. They might appoint board members, provide strategic guidance, and leverage their industry expertise to help the company succeed.

Exit Strategy:

Portfolio managers develop an exit strategy to realize returns for the fund’s investors. This could involve selling the company to a strategic buyer, merging with another company, or taking the company public through an IPO.

Portfolio Diversification:

Private equity firms manage a diversified portfolio of investments to mitigate risk. They may invest in companies across different industries, geographies, and stages of development.

Risk Management:

Portfolio managers assess and manage risks associated with each investment, including industry-specific risks, regulatory changes, macroeconomic factors, and competitive pressures.

Performance Monitoring and Reporting:

Private equity firms closely monitor the financial and operational performance of their portfolio companies on an ongoing basis.

Regular reporting to investors provides transparency into the performance of the fund’s investments.

Distribution of Returns:

As portfolio companies achieve milestones and are eventually sold or exit the investment, the private equity firm distributes returns to its investors based on the terms of the fund.

Challenges in Portfolio Management

Following are the challenges in Portfolio Management:

Challenges in Portfolio Management

Challenges in Portfolio Management

Value Creation:

Private equity portfolio managers need to implement effective value creation strategies within portfolio companies to enhance their performance and increase their value. Achieving operational improvements, strategic growth, and cost optimization can be challenging.

Exit Timing and Strategy:

Identifying the right time and strategy for exiting an investment is crucial. Economic conditions, market dynamics, and company-specific factors can all impact the success of an exit strategy.

Due Diligence Complexity of Portfolio Management

Conducting thorough due diligence on potential investment targets can be complex and time-consuming. Ensuring accurate financial information, evaluating operational risks, and assessing the quality of the management team are critical.

Management Team Alignment:

Aligning the goals and strategies of the private equity firm with the existing management team of the portfolio company can be challenging. Differences in management styles and objectives can hinder successful value creation.

Cyclical Industry Exposure:

Private equity investments can be exposed to specific industry cycles, economic downturns, and regulatory changes. Portfolio managers need to manage risk by diversifying across industries and adapting to changing market conditions.

Capital Allocation:

Allocating capital efficiently across a diverse portfolio of investments while maintaining a balance between risk and return can be a complex task.

Venture Capital

Following are the challenges faced by the venture capital firms:

Early-Stage Risk:

Venture capital investments are made in startups with high growth potential, but they also carry a significant level of risk. Many startups fail to reach profitability, making the success rate of investments uncertain.

Valuation Challenges:

Valuing early-stage startups can be challenging due to limited financial history and market comparable. Over- or undervaluing startups can impact the returns generated from the investments.

Exit Challenges:

The time and method of exit for venture capital investments can be uncertain. The IPO market may not always be favourable, and finding suitable acquisition opportunities can be difficult.

Portfolio Diversification:

Investing in startups requires diversification to mitigate risk, but building a diversified portfolio of early-stage companies can be resource-intensive and may require a large number of investments.

Information Asymmetry:

Gathering accurate and timely information from startups can be challenging, especially when startups are focused on growth and may not have standardized reporting.

Regulatory and Legal Complexity:

Startups often operate in industries with evolving regulatory landscapes, requiring portfolio managers to navigate legal and compliance challenges.

Magistral’s Services on Portfolio Management

Magistral provides portfolio management services for numerous kinds of businesses such as portfolios for venture capital and private equity funds. It is a hassle for all the investors who serve on numerous boards to apply what works in one portfolio business to another. When all businesses are in related industries and are contending with very comparable challenges, the issue becomes more serious. The lack of resources across companies, the short amount of time that board members may spend supervising, and the concentration of implementation expertise in a single portfolio company all work against board members.

Portfolio Management for VCs

Portfolio Management for VCs

We assist portfolio managers in consolidating their Marketing (mostly digital), Strategy (fund-raising and exits), and Finance at a fraction of the expense necessary to have specific duties in each portfolio firm, no matter how big or little. The off-shored extended team also makes sure that no information is lost for projects that are comparable across firms, and that several projects in different organizations can run simultaneously, prioritized by the calendar of board meetings.

Our service packages for Portfolio Management include:

Collecting Data– Collecting portfolio Data weekly/ monthly/ quarterly as per the client requirements.

Financial Models-  Preparing various types of financials models, financial statements and cash positions.

Data visualization- Creating dashboards in consistent formats across portfolio companies.

Review Meeting- Attending review meetings and prepare actionable notes.

Audits- First level audit of the data collected to ensure the quality and reliability of the data.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial Modelling, Portfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative: visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to  prabhash.choudhary@magistralconsulting.com

 

Introduction

In the realm of business and finance, the term “Middle Market” holds significant importance. The middle market refers to a unique economic segment between small businesses and large corporations. Companies falling within this range exhibit a revenue bracket that typically ranges from $10 million to $1 billion annually. The middle market plays a crucial role in driving economic growth, fostering innovation, and contributing to job creation. In this article, we will delve into the significance of the middle market, its defining characteristics, and its impact on the global economy.

Defining the Middle Market

The middle market stands as a robust driving force within a country’s economic framework, positioned strategically between diminutive enterprises and expansive multinational conglomerates. Yet, the precise delineation of the middle market’s boundaries exhibits a propensity for disparity, contingent upon the specific nation and sector under consideration. In the case of the United States, the National Center for the Middle Market (NCMM) elucidates this classification to encompass enterprises yielding annual revenues spanning from $10 million to $1 billion. This sweeping spectrum engulfs an extensive array of ventures spanning varied domains, including but not limited to manufacturing, technology, retail, and healthcare.

Characteristics of Middle Market Companies

Middle-market enterprises exhibit a range of distinct characteristics that differentiate them from both smaller enterprises and their larger counterparts. These differentiators encompass various crucial aspects:

Revenue and Market Influence

Middle-market enterprises are recognized for generating substantial revenue and maintaining a robust foothold in the market. Their financial solidity empowers them to navigate through market fluctuations effectively, thus positioning them as significant contributors to overall economic equilibrium.

Entrepreneurial Zeal

A substantial number of middle-market enterprises are established by driven entrepreneurs who have skilfully nurtured their ventures from modest beginnings into noteworthy market participants. This entrepreneurial drive not only nurtures innovation but also propels advancements within the sector.

Agile and Versatile

Unlike their more sizeable corporate counterparts, middle-market companies often display enhanced agility and adaptability, enabling them to swiftly respond to shifts in market dynamics and evolving customer preferences.

Employment Generation

A pivotal role played by middle-market enterprises is their capacity to serve as major employers, offering a plethora of job opportunities within their local communities. Through this, they play a crucial part in ameliorating unemployment rates and propelling economic expansion.

Role of Middle Market in the Economy

The role of middle market in the economy is of

Role of Middle Market in the Economy

Role of Middle Market in the Economy

Economic Growth and Stability

Middle-market companies have shown remarkable consistency in outperforming both smaller businesses and larger enterprises in terms of revenue and job creation across different economic cycles. Their ability to adapt to changing market conditions contributes significantly to overall economic stability. When these companies thrive, they create a ripple effect throughout the economy, leading to increased consumer spending, investment, and job opportunities.

Innovation and Research

Middle-market companies often act as innovation catalysts due to their agility and fewer bureaucratic constraints compared to larger corporations. Their ability to experiment and invest in research and development can lead to groundbreaking advancements in technology, processes, and business models. This innovation not only benefits the companies themselves but also contributes to the broader economy by fostering technological progress and competitiveness.

Supply Chain and Job Multiplier

Middle-market companies are major consumers of goods and services, which stimulates growth in their supply chains. As these companies expand, they create increased demand for goods, services, and talent, leading to job growth across various sectors. This multiplier effect can lead to a more interconnected and resilient economy.

Regional Development

The decision by middle-market companies to establish headquarters or manufacturing units in specific regions can have a transformative impact on those areas. This often leads to the development of infrastructure, increased local investment, and improvements in living standards. The presence of such companies can attract other businesses, creating a positive feedback loop of growth and development within the region.

Challenges Faced by Middle Market Companies

While the midsize business sector enjoys a range of benefits, it is not devoid of its own set of difficulties:

Challenges Faced by Middle Market Companies

Challenges Faced by Middle Market Companies

Capital Accessibility

Companies in the midsize market often encounter a funding gap that exists between small startups and large enterprises. They may lack the financial track record or assets necessary for easy entry into public markets and might not meet the criteria for government aid typically intended for smaller enterprises. Consequently, these businesses might need to explore alternate avenues for financing, such as private equity, venture capital, or debt-based funding.

Recruitment and Retention of Talent

Firms in the midsize category frequently grapple with the task of attracting and retaining top-tier professionals, particularly within fiercely competitive sectors. Bigger corporations might possess the means to provide more enticing compensation packages, comprehensive perks, and extensive career advancement prospects. Midsize companies need to concentrate on cultivating a positive organizational culture, extending distinctive incentives, and presenting avenues for personal growth to effectively vie for proficient staff.

Global Expansion

Expanding operations and venturing into international markets can pose challenges for midsize enterprises due to resource and expertise constraints. Navigating diverse markets, cultural nuances, and regulatory frameworks necessitates meticulous planning and substantial investment. Forging strategic partnerships, capitalizing on local insights, and harnessing technology can empower midsize businesses to surmount these obstacles and establish a competitive global presence.

Adherence to Regulatory Standards

Adhering to intricate regulations, both at home and abroad, can impose noteworthy burdens on midsize companies. They might lack the dedicated legal and compliance teams that larger corporations boast. Staying well-informed about shifts in regulations, allocating resources to compliance infrastructure, and seeking adept professional counsel can empower midsize enterprises to effectively manage these challenges.

Effectively addressing these challenges entails a blend of strategic forethought, innovative thinking, and adaptability. Midsize enterprises that can devise strategies to surmount these hindrances will be strategically positioned for enduring expansion and accomplishment.

Magistral’s Services for Middle Market

Magistral Consulting has risen to prominence within the middle market as a prominent participant, furnishing a comprehensive array of services to address the distinct requisites and trials confronted by enterprises in this particular sector. Functioning as a preeminent consultancy, Magistral’s specialized provisions empower middle-market entities to unlock their potential, stimulate advancement, and navigate the intricacies of the current cutthroat commercial milieu. The ensuing discourse delves into Magistral Consulting’s principal services, elucidating their value infusion into middle-market establishments.

Strategic Mapping and Advancement Counsel

Magistral Consulting appreciates the exigency for resilient strategic mapping to attain sustainable expansion within middle-market corporations. The adept team of professionals at their disposal collaborates intimately with patrons to engineer personalized expansion blueprints, harmonizing with their unique aspirations, industry dynamics, and market prospects. This encompasses market analysis, competitive evaluation, and the formulation of executable strategies to augment market stake and enrich revenue margins.

Fiscal Oversight and Capital Optimization

In the milieu of the middle market, effective fiscal management is pivotal for survival and triumph. Magistral’s fiscal management amenities encompass budgetary allotment, streamlining cash inflows, and capital apportionment tactics. They guide clientele in striking the delicate equilibrium between debt and equity financing, affording them access to requisite resources for expansion whilst curtailing fiscal vulnerabilities.

Advisory for Mergers and Acquisitions (M&A)

Frequently, middle-market entities seek avenues for expansion through mergers, acquisitions, or strategic affiliations. Magistral Consulting extends proficient M&A advisory amenities, escorting clients through every phase of the process, from pinpointing targets and carrying out due diligence to architecting agreements and amalgamating post-transaction. Their perspicacity facilitates judicious choices, risk attenuation, and maximization of transactional value.

Augmentation of Operational Efficiency

Efficient operations bear paramount significance for middle-market firms aspiring to rationalize costs and refine productivity. Magistral extends aid to patrons in identifying procedural bottlenecks, assimilating best practices, and deploying state-of-the-art technology to optimize proceedings and amplify comprehensive efficiency.

Digital Evolution and Technological Assimilation

In the epoch of digitization, the assimilation of technology is indispensable for sustainable advancement. Magistral Consulting emboldens middle-market enterprises in their odyssey of digital transformation, tendering counsel on the amalgamation of advanced technologies, encompassing Artificial Intelligence, Big Data analytics, and cloud solutions, to amplify decision-making precision and client interactions.

Nurturing Talent and Strategies for Human Capital

Middle-market establishments often grapple with enticement, preservation, and cultivation of top-tier talent. Magistral Consulting offers bespoke human capital strategies, encompassing talent acquisition, leadership nurturing, and staff engagement initiatives, guaranteeing patrons a competent and driven workforce steering their accomplishments.

Risk Management and Adherence to Regulatory Norms

Compliance with an incessantly evolving regulatory landscape is a principal concern for middle-market entities. Magistral Consulting lends a helping hand to clients in erecting robust risk containment frameworks and charting the course through intricate compliance obligations, fortifying their defense against legal and reputational perils.

Ingress into Fresh Markets and Global Enlargement

For middle-market corporations harboring ambitions of international markets, Magistral Consulting provides market ingress tactics and expansion paradigms. Their connoisseurs conduct market appraisals, gauge cultural subtleties, and facilitate clients in surmounting regulatory obstacles, paving the way for prosperous global proliferation.

Branding, Marketing, and Sales Tactics

Effective branding and marketing constitute vital components for middle-market firms to etch their presence and allure customers. Magistral extends personalized branding, marketing, and sales tactics to heighten visibility, forge a resilient brand identity, and stimulate revenue escalation.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

Introduction

These businesses focus on managing the daily operations and tactical supervision of real estate assets with the intention of maximizing investment returns and minimizing risks. The improvement of a property or portfolio’s worth and profitability is the main goal of real estate asset management. This entails a variety of tasks, including the purchase and sale of real estate, leasing, tenant interactions, financial analysis, budgeting, property administration, renovations, and overall portfolio improvement.

To create and implement a customized asset management strategy, real estate asset management companies frequently collaborate closely with investors or property owners. This approach takes into account the precise goals and objectives of the investor or property owner, the state of the market, and the particular qualities of the asset or portfolio.

Asset managers draw on their expertise and sector knowledge to evaluate market trends, spot possibilities for wealth creation, and make educated decisions on their client’s behalf. They keep a close eye on the assets’ performance, evaluate the state of the market, and put strategies into place to raise occupancy rates, rental revenue, and the overall value of the assets.

Real estate asset management companies offer thorough reporting, financial analysis, and regular property management tasks. They give frequent financial statements, keep clients updated on the status of their assets, and make suggestions for raising returns and lowering risks.

In general, real estate asset management companies offer their knowledge to efficiently manage and increase the value of real estate assets, acting as trusted partners for investors and property owners. In the fast-paced and cutthroat real estate market, their emphasis on strategic planning, operational execution, and financial optimization helps customers realize their investment goals.

Benefits of Real Estate Asset Management

Property owners, investors, and institutions can all profit from real estate asset management in several ways. These advantages show the value that real estate asset management provides to investors and property owners, allowing them to fulfill their investment objectives, maximize the performance of their properties, and reduce risks in the constantly changing real estate market. The following are some major advantages of managing real estate assets:

Benefits of Real Estate Asset Management

Benefits of Real Estate Asset Management

-Maximize Property Value

Real estate asset managers employ tactics to boost rental income, lower vacancies, and improve property performance to maximize the value of properties. They evaluate market conditions, seek out chances to add value and carry out strategies to optimize returns on investments.

-Experience and Sector Knowledge

The real estate market, developments, and optimal procedures are all deeply ingrained in the understanding of asset managers. They keep up with local market conditions, legislative changes, and business prospects, enabling them to make wise judgments and successfully manage risks.

-Risk Minimization

Asset managers recognize and control risk factors connected to real estate holdings. They create risk management plans, put insurance in place, and make sure all legal and regulatory requirements are met. This minimizes potential damages and protects the property owner’s investment.

-Financial Efficiency Evaluation

To evaluate the efficacy of real estate assets, asset managers conduct financial analysis and reporting. They offer information about cash flow, rental revenue, costs, and return on investment. Property owners can make informed judgments and improve financial performance with the help of this information.

-Portfolio Optimization and Diversification

Property owners can diversify and improve their real estate assets with the aid of asset managers. To create a balanced and high-performing portfolio, they monitor market conditions, appraise the portfolio’s composition, and suggest investment options.

-Resource and Time Conservation

Property owners may conserve time and money by giving experts the task of managing their assets. Property owners can concentrate on other issues since asset managers take care of the daily tasks, financial evaluation, tenant administration, and other challenging activities.

-Connections and Contacts

Asset managers have wide-ranging connections with brokers, suppliers, and other real estate industry experts. For the benefit of property owners, they use these networks to gain access to market knowledge, real estate prospects, and potential alliances.

Steps in Managing Real Estate Assets

It’s crucial to remember that these stages may change depending on the particular property, investor requirements, and market conditions. To provide the best results, real estate asset management is a dynamic, iterative process that needs constant review and modification. The general steps in managing real estate assets are as follows:

Steps in Managing Real Estate Assets

Steps in Managing Real Estate Assets

-Establishing Expectations: 

The first stage is to set up particular aspirations and targets for the real estate asset. Identifying the owner’s or investor’s financial goals, willingness to take risks, and anticipated return on investment is necessary for this.

-Asset Handling Approach:

Create a customized asset management plan based on the owner’s objectives and the property analysis. This plan defines the course of action to be followed to increase property value, optimize income, reduce empty spaces, and reduce risks.

-Property Analysis:

Analyze the property or portfolio thoroughly to comprehend its existing state, standing in the market, and the possibility of value amplification. This entails assessing elements like location, physical state, market demand, and possible rental income.

-Property Development and Preservation:

To maintain the property’s aesthetic appeal and physical condition, implement a preventative maintenance strategy. This covers routine checks, preventative maintenance, and required improvements to raise the property’s worth.

-Mitigate Risk:

Determine and reduce the property’s risks, including market turbulence, legal and regulatory compliance, and environmental problems. Put into practice risk management solutions, such as insurance coverage, backup plans, and legal compliance procedures.

-Performance Assessment:

Keep an eye on the asset’s performance in comparison to stated objectives and key performance indicators (KPIs). Monitoring the property’s performance entails examining financial records, occupancy rates, rental income, and other pertinent measures.

-Interaction and Reporting:

Give the investor or property owner frequent information and updates. Financial documents, performance reports, and suggestions for maximizing property value are included.

-Making Strategic Decisions:

Analyze market circumstances, industry developments, and prospects for value creation constantly. To optimize returns, choose wisely when buying, selling, refinancing, and making other strategic decisions about real estate.

Magistral Consulting’s Real Estate Asset Management Services

Magistral Consulting offers high-quality Real Estate Operations Outsourcing services. While all other asset class experiences ups and downs, real estate is the only one that is consistently profitable. Even during economic downturns, it retains investors’ trust. With the assurance of long-term income, it is convenient to hang onto the tangible quality of the asset class. It provides the finest profits and investment safety available today. It’s critical to comprehend a property’s potential in terms of returns to succeed in RE funds. Consistent returns are guaranteed year after year when the property is managed over a longer period.

Magistral helps you navigate the exciting world of Real Estate investments. Our services of Real Estate Operations outsourcing are helpful for Real Estate Private Equity, Real Estate Developers and Owners, REITs, and, Property Consultants and Brokers.

Here are the service categories we provide:

-Fund Raising and Exits

Identifying Limited Partners, Funding Strategy, Funding Environment Analysis, Pitch Deck, Investor Committee Presentations, Equity Waterfall Analysis, and, other similar assignments.

-Pre-Deal Support

Investment Memorandums, Financial Modeling, Real Estate Valuations and Returns, Market Analysis, Property Profiling, and, Data Management. Real Estate Due Diligence Is also performed under this bouquet of services.

-Deal Structuring

Real Estate Modeling, Rent Rolls Analysis, Rental Comps, Equity Waterfalls, Funding Requirement Analysis, and, Investor Committee Memorandums.

-Portfolio Management

Board Updates, Occupancy and Yield Trackers, Real Estate Yields, REIT Dividend Calculations, Tracking Real Estate Fund Indices, Rent Roll Analysis, Expenses & Budgets, Real Estate Fund Accounting, Fund Administration and Accounting, Fund Fee Structures, and, Portfolio Dashboards.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative: visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

Financial Modeling Outsourcing refers to the practice of enlisting external service providers or specialized firms to handle the creation and maintenance of financial models. This involves assigning the tasks of designing, building and updating these models to professionals who possess the necessary expertise and resources.

Financial modeling plays a crucial role in the realms of business and finance, as it entails constructing mathematical representations of real-world financial situations. These models predict and evaluate various aspects of a company’s financial performance, such as revenue forecasts, cost analyses, investment valuations, cash flow projections, and scenario assessments. By providing insights into potential outcomes and associated risks, financial models facilitate decision-making processes.

Advantages of Financial Modeling Outsourcing

Financial modeling outsourcing offers several key advantages that organizations can leverage to enhance their financial planning and decision-making processes. Some common benefits include:

Advantages of Financial Modeling Outsourcing

Advantages of Financial Modeling Outsourcing

Cost savings and scalability:

Financial modeling outsourcing presents a significant cost-saving opportunity compared to maintaining an in-house team. By outsourcing to external providers, organizations can avoid expenses related to hiring and training specialized staff, investing in technology infrastructure, and ongoing maintenance. This flexible approach allows businesses to scale their demand-based modeling needs, ensuring cost efficiency and resource optimization.

Access to specialized expertise:

Outsourcing financial modeling tasks grants organizations access to professionals who possess specialized knowledge and expertise in the field. These experts have a deep understanding of best practices, industry standards, and regulatory requirements. By partnering with these skilled professionals, organizations can ensure the accuracy, reliability, and compliance of their financial models, benefiting from their extensive experience and insights.

Enhanced efficiency and productivity:

Delegating financial modeling tasks to external experts allows internal teams to focus on core competencies and strategic initiatives. By entrusting time-consuming and specialized tasks to external providers, organizations can streamline their operations, improve overall productivity, and allocate resources more effectively. This enables internal teams to concentrate on high-value activities such as data analysis, decision-making, and strategy formulation, ultimately driving organizational growth.

Improved accuracy and reliability:

External companies that offer financial modelling carry out strict quality checks. They use advanced modelling approaches, follow industry best practices, and do thorough validations. Organizations may make sure that their financial models are accurate and reliable by utilizing their knowledge and experience. As a result, financial estimates and analyses become more accurate and reliable, facilitating the making of well-informed decisions.

Risk Mitigation:

Financial modeling outsourcing helps organizations mitigate risks by leveraging external expertise. External providers have extensive experience across various industries and markets, enabling them to offer valuable insights and identify potential risks or limitations in financial models. They can also provide independent validation and verification of models, reducing the chance of errors or biases. By tapping into their knowledge, organizations can make more informed decisions and reduce exposure to financial risks.

In essence, financial modeling outsourcing offers numerous advantages, including cost savings, access to specialized expertise, enhanced efficiency and productivity, improved accuracy and reliability, and risk mitigation. By leveraging these benefits, organizations can optimize their financial planning and decision-making processes, gain a competitive edge, and achieve better financial performance.

Challenges of Financial Modeling Outsourcing

While financial modeling outsourcing offers numerous benefits, it is crucial for organizations to be aware of the challenges and risks associated with this practice. By understanding these potential pitfalls, businesses can take proactive measures to address them effectively. Here are some of the significant challenges and risks in financial modeling outsourcing:

Data security and confidentiality concerns:

Organizations must divulge sensitive financial data to outside sources when outsourcing financial modelling tasks. To guard against unauthorized access, security breaches, and abuse of sensitive data, it is crucial to make sure that effective data security measures are in place. Throughout the outsourcing process, it is crucial to protect intellectual property and uphold confidentiality agreements.

Communication and coordination challenges:

Effective communication plays a vital role in successful financial modeling outsourcing. Geographical and cultural differences, language barriers, and time zone disparities can hinder seamless collaboration between organizations and external providers. It is crucial to establish clear channels of communication, define expectations, and maintain regular updates to ensure effective coordination throughout the outsourcing engagement.

Quality control and standardization:

Maintaining consistency and quality across outsourced financial models can be challenging. Organizations should establish robust processes and standards to ensure that the models meet their specific requirements and adhere to industry best practices. Regular monitoring and quality control checks should be implemented to maintain the desired level of accuracy and reliability.

Dependency on external providers:

Outsourcing financial modeling tasks means relying on external providers to deliver accurate and timely results. Organizations must carefully select reputable and reliable providers with a proven track record. Building strong relationships, maintaining open lines of communication, and conducting periodic performance evaluations are essential to ensure that the outsourcing partner consistently meets expectations.

Regulatory and compliance considerations:

Financial models must adhere to rules and laws particular to their business. To avoid any compliance difficulties, organizations need to make sure that external providers are knowledgeable of these rules. During the outsourcing process, regulatory compliance with regulations like the Sarbanes-Oxley Act (SOX) or International Financial Reporting Standards (IFRS) should be thoroughly assessed and addressed.

By proactively addressing these challenges and risks, organizations can mitigate potential pitfalls associated with financial modeling outsourcing. Implementing robust data security measures, fostering effective communication, establishing quality control processes, selecting reliable providers, and ensuring regulatory compliance are key steps toward successful outsourcing engagements.

Magistral’s Services on Financial Modeling Outsourcing

Magistral Consulting is recognized as a leading provider of specialized financial modeling outsourcing services and solutions. With a proven track record of delivering outstanding results, we offer a comprehensive range of services tailored to meet the diverse needs of organizations across industries.

Magistral's Services on Financial Modeling Outsourcing

Magistral’s Services on Financial Modeling Outsourcing

Unparalleled Expertise and Specialization:

We take pride in our team of highly skilled professionals who possess extensive expertise in financial modeling. Our experts are well-versed in industry best practices, regulatory requirements, and the latest advancements in financial modeling techniques.

Tailored and Customized Solutions:

Whether it involves developing financial models for revenue forecasting, cost analysis, investment valuation, or scenario analysis, we work closely with clients to thoroughly understand their needs and deliver solutions that align with their strategic goals.

Cost-Effectiveness and Scalability:

Recognizing the importance of cost savings and scalability in today’s competitive business environment, we offer a cost-effective outsourcing solution. By entrusting financial modeling tasks to us, organizations can significantly reduce costs compared to maintaining an in-house team.

Confidentiality and Data Security:

Safeguarding the confidentiality and security of our clients’ data is of utmost importance to Magistral Consulting. We adhere to strict data protection protocols to ensure that sensitive financial information remains secure throughout the outsourcing process.

Quality Control and Assurance:

At Magistral Consulting, delivering accurate and reliable financial models is our top priority. We have established rigorous quality control processes to maintain consistency and adhere to industry best practices. Our team conducts thorough validations and employs advanced modeling techniques to ensure the accuracy and reliability of the models we create.

As a trusted partner in financial modeling outsourcing, Magistral Consulting empowers organizations to optimize their financial planning and decision-making processes. Our specialized expertise, customized approach, cost-effective solutions, focus on confidentiality and data security, rigorous quality control processes, and collaborative approach enable businesses to gain a competitive edge and unlock the full potential of financial modeling in driving their success.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative:

visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

Sensitivity Analysis establishes the impact of various independent variable values on a specific dependent variable under a specific set of assumptions. In other words, sensitivity analyses look at how different types of uncertainty in a mathematical model affect the overall level of uncertainty. This method is applied within defined parameters that are dependent on one or more input variables.

In the realm of business and the study of economics, sensitivity analysis is applied. It is sometimes referred to as a “what-if analysis,” and financial analysts and economists frequently employ it. Finance sensitivity analysis aids in the understanding of potential risks, uncertainties, and trade-offs related to financial decisions. It facilitates risk management, permits informed decision-making, and improves comprehension of the spectrum of potential outcomes in various financial circumstances.

Share price predictions for publicly traded firms can be aided by sensitivity analysis. A few elements that affect stock prices are the company’s earnings, the number of shares in circulation, the ratio of debt to equity (D/E), and the number of opponents in the market. Examining future stock prices can be enhanced by altering the underlying hypotheses or introducing new factors. Using this model, it is possible to determine how changing interest rates affect bond prices. It enables the use of actual historical data for forecasting. Carefully examining all the elements and potential outcomes can help one make crucial decisions about investment, businesses, and the economy.

Applications of Sensitivity Analysis

Sensitivity analysis is a popular tool in finance for determining how changes in input variables or assumptions would affect risk management, investment choices, and other financial applications. Finance sensitivity analysis offers insightful information about potential risks, uncertainties, and trade-offs related to financial models, investment choices, and risk management tactics. It helps with decision-making, risk quantification, portfolio optimization, and improving comprehension of the effects of numerous factors on financial results.

Application of Sensitivity Analysis

Applications of Sensitivity Analysis

The following are some crucial financial uses of sensitivity analysis:

Pricing and Estimation

Sensitivity analysis is essential for evaluating complicated derivatives, options, bonds, and other financial instruments. Analysts can determine how sensitive the value of an instrument is to various inputs, such as underlying asset prices, interest rates, volatility, or dividend yields. It aids in assessing the impact of changes in market conditions on the pricing of financial instruments as well as recognizing the main drivers of value.

Risk Mitigation

It is useful to comprehend how different market conditions affect portfolio returns, value-at-risk (VaR), or other risk assessments. Sensitivity analysis is used to facilitate stress testing, scenario analysis, and assessing the resilience of financial institutions or portfolios to volatile market conditions.

Asset Distribution and Portfolio Management

Asset allocation and portfolio optimization are accomplished through sensitivity analysis. Analysts can determine the best allocation techniques by evaluating how responsive portfolio returns, risk measures or other performance indicators are to changes in asset weights, correlations, or other portfolio parameters. It helps in assessing the possible effects of asset class returns, monetary considerations, or market conditions on portfolio performance and serves as a roadmap for portfolio modifications.

Making Decisions and Budget Allocation

Financial statement sensitivity to changes in revenue growth rates, cost structures, or interest rates can be assessed by analysts for financial statements like income statements, balance sheets, or cash flow statements. Sensitivity analysis supports decision-making by shedding light on the potential effects of various scenarios on financial performance.

Assessing Investments and Capital Planning

Analysts can determine the sensitivity of investment indicators such as net present value (NPV), internal rate of return (IRR), or payback duration by adjusting important parameters like cash flows, discount rates, or project timelines. This research aids in understanding the range of probable outcomes for various investment situations as well as the most important elements affecting investment profitability.

Benefits of Sensitivity Analysis

Sensitivity analysis in finance offers several benefits that contribute to better decision-making, risk management, and understanding of financial outcomes. It in finance aids in improved risk management, more informed decision-making, and a deeper comprehension of the range of possible outcomes. It aids in quantifying uncertainty, identifying crucial elements, and enhancing stakeholder communication, ultimately resulting in more solid and trustworthy financial strategies and plans. Here are some key benefits of sensitivity analysis in finance:

Benefits of Sensitivity Analysis

Benefits of Sensitivity Analysis

Risk Assessment of Sensitivity Analysis

Sensitivity analysis is a tool for evaluating and controlling risks related to financial models, portfolios, or investment choices. Analysts can detect and quantify potential risks by examining how sensitive financial outcomes are to changes in important variables. This knowledge improves the ability to adapt to various market conditions and enables the implementation of suitable risk mitigation techniques.

Measurement of Uncertainty

The uncertainty connected to financial models, projections, or investment decisions can be quantified with the aid of sensitivity analysis. Analysts can determine the range of possible outcomes and the likelihood of various scenarios by evaluating the sensitivity of financial outcomes to changes in factors.

Identifying Crucial Factors of Sensitivity Analysis

Sensitivity analysis aids in locating the most important factors or hypotheses that have a major impact on financial outcomes. Analysts can identify the factors that impact the outcomes most by changing the inputs and analyzing how those changes affect the outputs. Decision-makers can focus their attention and resources more effectively and strategically by using this knowledge to identify the most important aspects.

Stress Testing

Scenario analysis and stress testing, which are essential for evaluating the robustness of financial models, portfolios, or institutions, are made easier by sensitivity analysis. Analysts can track how financial outcomes react to difficult circumstances by modeling various scenarios and stress variables. This analysis aids in locating weak points, estimating the impact that extreme events might have, and creating backup plans or risk-reduction tactics.

Better Communication

Sensitivity analysis shows the connections between input factors and financial results simply and visually. Stakeholders and decision-makers can better understand the significance and influence of many variables with the aid of visual tools like tornado diagrams and sensitivity charts. This promotes dialogue, enhances stakeholder understanding, and increases the transparency of financial decision-making processes.

Magistral’s Services on Sensitivity Analysis

Financial models have a long history of being trusted tools for determining the boundaries of trade. Due to a recent surge of acquisitions where investors are willing to pay big premiums for rapid growth or a high-impact technology, traditional financial models have undergone qualitative changes. The following is ensured by Magistral’s sensitivity analysis:

-Analyzing the financial model’s unclear input values.

-Predicting potential outcomes and planning for unanticipated risks.

-Aiding the execution of risk assessment techniques.

-Establishing co-relationships between the model’s multiple inputs and output.

-Execution of well-informed judgments.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative: visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

A Cryptocurrency ETF, or Cryptocurrency Exchange-Traded Fund, is an investment fund that monitors the performance of one or more cryptocurrencies. It functions just like standard ETFs do, except instead of following conventional assets like equities or bonds, it concentrates on digital assets like Bitcoin, Ethereum, or other cryptocurrencies. With no need to actively own or manage the underlying digital assets, it enables investors to acquire exposure to the price and performance fluctuations of cryptocurrencies. For individuals and organizations interested in entering the cryptocurrency industry, it offers a regulated and well-known investment vehicle.

With the ability to purchase and sell shares at any time during the trading day, just like stocks, cryptocurrency ETFs are traded on conventional stock exchanges. They offer the comforts of liquidity, transparency, and trading simplicity, much like other ETFs. A cryptocurrency exchange-traded fund (ETF)’s value is based on the values of the cryptocurrencies it tracks. The fund aims to duplicate the performance of the underlying digital assets through direct ownership or derivative deals like futures or swaps.

Cryptocurrencies have rapidly emerged as a dynamic and transformative asset class, captivating investors around the globe with their potential for high returns and technological innovation. However, navigating the world of digital assets can be daunting for traditional investors, hindered by concerns over security, regulatory uncertainties, and the complexity of cryptocurrency ownership. Enter the realm of Cryptocurrency Exchange-Traded Funds (ETFs), a bridge between traditional finance and the rapidly evolving digital asset ecosystem. These investment vehicles offer a regulated and convenient means for investors to gain exposure to cryptocurrencies, combining the familiarity of traditional ETFs with the potential of this exciting new asset class.

Overall, ETF offers investors a structured and regulated means to obtain exposure to the potential returns and hazards of the cryptocurrency market without the complications involved with direct ownership and management of digital assets.

Types of Cryptocurrency ETFs

Cryptocurrency ETFs come in various types, catering to different investment preferences and strategies. Here are some common types of Cryptocurrency ETFs:

Types of Cryptocurrency ETFs

Types of Cryptocurrency ETFs

Single-Cryptocurrency ETFs:

Single-Cryptocurrency ETFs focus on tracking the performance of a single cryptocurrency, such as Bitcoin (BTC) or Ethereum (ETH). They provide investors with exposure to a specific digital asset and its price movements. These ETFs are designed for investors who have a specific interest in a particular cryptocurrency and want targeted exposure to its performance.

Diversified Cryptocurrency ETFs:

Diversified ETFs encompass a portfolio of multiple cryptocurrencies, offering investors a broader exposure to the digital asset market. They typically include a mix of established cryptocurrencies like BTC and ETH, as well as a selection of altcoins or smaller market-cap cryptocurrencies. These ETFs aim to provide investors with a more balanced and diversified exposure to the overall cryptocurrency market, spreading the risk across different digital assets.

Actively Managed Cryptocurrency ETFs:

Actively managed ETFs employ professional fund managers or investment teams who actively make investment decisions and adjust the ETF’s holdings based on market conditions and their research and analysis. Such ETFs may involve tactical asset allocation, taking advantage of market opportunities, and adapting to changes in the cryptocurrency landscape. Fund managers may also implement risk management strategies to mitigate downside risks.

Passive Index-Based Cryptocurrency ETFs:

ETFs with passive index support attempt to mimic the performance of a certain cryptocurrency index or benchmark. These ETFs adhere to a set of guidelines and hold cryptocurrencies in ratios that correspond to the index they follow. using a passive index Rather than actively managing the portfolio, cryptocurrency ETFs provide investors a passive investment strategy by attempting to mimic the performance of the selected index.

Leveraged and Inverse:

Leveraged ETFs aim to provide amplified returns by utilizing derivatives or other strategies to magnify the price movements of the underlying cryptocurrencies. For example, a 2x leveraged ETF may seek to deliver twice the daily return of its reference index.

On the other hand, inverse ETFs aim to produce returns that are the complete opposite of how the underlying cryptocurrencies perform. Investors can use these ETFs to profit from falling cryptocurrency prices or to protect their current cryptocurrency holdings.

Benefits of Cryptocurrency ETFs

Cryptocurrency ETFs offer a host of advantages that make them an attractive option for investors seeking exposure to digital assets. Some of the benefits include:

Benefits of Cryptocurrency ETFs

Benefits of Cryptocurrency ETFs

Diversification and Risk Mitigation:

Investing in ETFs provides investors with the advantage of diversification by offering exposure to a diversified portfolio of cryptocurrencies. By investing in an ETF, individuals can spread their risk across multiple digital assets, reducing their exposure to the volatility of any single cryptocurrency.

Convenience and Ease of Access:

Cryptocurrency ETFs bring convenience and accessibility to the world of digital asset investing. Being traded on traditional stock exchanges, they offer familiarity and ease of access for investors who are more comfortable with traditional financial markets. This eliminates the need for individuals to navigate complex crypto exchanges or manage their digital wallets.

Regulatory Compliance:

An important benefit of cryptocurrency ETFs is their adherence to regulatory frameworks, providing investors with a level of protection and transparency. Unlike unregulated crypto exchanges, ETFs operate under regulatory oversight, ensuring compliance and offering safeguards to investors. This regulatory compliance builds trust, particularly among institutional investors who are typically more cautious when entering the cryptocurrency market.

Enhanced Market Liquidity and Price Efficiency:

Cryptocurrency ETFs contribute to the liquidity and efficiency of the digital asset market. By attracting institutional investors and a larger pool of participants, these ETFs enhance market liquidity. This increased liquidity promotes smoother trading and fosters better price discovery, reducing the impact of market inefficiencies.

Challenges of Cryptocurrency ETFs

Cryptocurrency ETFs, or Exchange-Traded Funds, are investment vehicles that aim to mirror the performance of one or more cryptocurrencies. While they offer potential advantages, they also present several obstacles. Here are some of the main challenges associated with cryptocurrency ETFs:

Volatility and market risk:

Cryptocurrencies are known for their high volatility, with prices often experiencing significant fluctuations in short periods. This volatility poses risks for investors in cryptocurrency ETFs. Additionally, the lack of liquidity in cryptocurrency markets can make it difficult for ETFs to accurately track the underlying asset’s price, potentially resulting in tracking errors.

Security vulnerabilities:

Cryptocurrencies face inherent security risks due to their digital nature. Hacking, fraud, and theft are constant concerns in the cryptocurrency space. The security of the ETF’s underlying digital assets is crucial, and any security breaches or incidents could lead to substantial losses for investors.

Liquidity challenges:

Cryptocurrency markets can be relatively illiquid compared to traditional financial markets. ETFs require sufficient liquidity to ensure smooth trading and efficient price discovery. If the underlying cryptocurrency market lacks liquidity, it can impact the ETF’s ability to create and redeem shares, leading to wider bid-ask spreads and higher trading costs.

Price manipulation:

The decentralized and less regulated nature of cryptocurrency markets makes them susceptible to price manipulation. Activities such as pump-and-dump schemes and wash trading can distort cryptocurrency prices. If an ETF’s underlying assets are subject to manipulation, it can affect the ETF’s net asset value (NAV) and investor returns.

Custody and storage:

Secure digital wallets are required for the storage of cryptocurrencies. The management of these assets can be difficult, requiring specialised infrastructure and safety precautions. For bitcoin ETFs, ensuring proper custody and safety of the underlying digital assets is essential.

Limited historical data:

Cryptocurrencies, especially Bitcoin, have a relatively short history compared to traditional financial assets. The lack of extensive historical data makes it challenging to accurately assess long-term trends, correlations, and risk-return characteristics. This can make it difficult for investors to evaluate the potential risks and rewards of ETFs.

Some of these difficulties might be eased as the bitcoin sector develops and regulators create clearer regulations. Before purchasing bitcoin ETFs, investors should thoroughly weigh the dangers, as well as their risk tolerance and financial goals.

Magistral’s Services on Cryptocurrency ETFs

Magistral consulting services cater to ETFs and encompass expert advice and guidance provided by professionals or consulting firms well-versed in the domain of exchange-traded funds based on cryptocurrencies. Our extensive set of offerings includes:

Fund Structuring and Strategy:

Consultants offer recommendations on optimal fund structures and strategies for cryptocurrency ETFs, including determining the appropriate index or benchmark, defining the investment objective, and establishing asset allocation and rebalancing strategies.

Market Analysis:

We conduct comprehensive market research and analysis, providing clients with valuable insights into the cryptocurrency market and specific opportunities related to ETFs. This includes analyzing market trends, assessing risks and rewards, and identifying potential investment prospects.

Risk Assessment:

Our senior consultants perform thorough due diligence on prospective cryptocurrency ETFs, evaluating the quality and security of digital assets, assessing the fund’s management team, and analyzing associated risks.

Performance Monitoring and Reporting:

We assist clients in monitoring the performance of cryptocurrency ETFs, analyzing key performance indicators, evaluating tracking errors, and providing insights to optimize fund performance.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative:

visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

For institutional investors, buy-side research is essential in making investment decisions. To find appealing investment opportunities and effectively manage investment portfolios, requires doing in-depth study and research. Buy-side research is carried out by analysts who work directly for institutional investors, as opposed to sell-side research, which is carried out by analysts employed by brokerage companies and primarily serves to make recommendations to customers. Buy-Side Research and Analytics are concerned with determining the asset’s full potential. It tries to provide answers to the following important queries regarding the asset being traded. The most important component of the Buy-side research is locating the asset itself to purchase.

There are many different types of transactions in the financial sector. Every time a transaction takes place, there are two parties involved: one who sells the asset and one who purchases it. The sell-side refers to the party selling the asset, and the buy-side refers to the party purchasing the item. Private or public businesses, real estate, and other financial assets that produce returns or increase in value over time are examples of assets. The success of a transaction is significantly influenced by buy-side research.

Insights and a thorough grasp of numerous investment options, such as stocks, bonds, commodities, real estate, and alternative investments, are the main goals of buy-side research. Buy-side researchers seek to discover new trends, find cheap assets, and evaluate the risks of potential investments by undertaking in-depth analysis. The typical framework for buy-side research is an investment strategy or mandate established by the institutional investor. This strategy specifies the portfolio’s asset classes, investment goals, risk tolerance, and asset classification rules.

It is a dynamic, ongoing activity. Researchers closely monitor economic data, news items, and market moves that can affect investment decisions. To get more data and strengthen their analysis, they also actively engage in conversation with company leaders, subject matter experts, and other market participants. Institutional investors typically rely on buy-side research to assist them in managing their portfolios and selecting profitable investments. It necessitates superior analytical and research skills in addition to a profound understanding of financial markets, commercial trends, and valuation procedures.

Categories of Buy-Side Research

These divisions offer a structure for arranging and categorizing activities related to buy-side research. The distinctions between these categories can, however, be ambiguous, and there may be overlaps or hybrid approaches depending on the precise research goals and investment tactics used by various organizations.

Categories of Buy-Side Research

Categories of Buy-Side Research

The following categories can be used to categorize the research:

Equity Research

Individual stocks or equities are the focus of equity research. It includes assessing a company’s financial performance, growth potential, strategic positioning, and valuation.

Fixed Income Research

Bonds, fixed-income securities, and debt instruments are all fixed-income research subjects. It primarily focuses on yield analysis, bond valuation, credit risk assessment, and interest rate risk assessment.

Macro Research

Examines various macroeconomic elements, such as financial and geopolitical developments, interest rates, inflation, and economic indicators. Investors can explore the effects of macro factors on investment opportunities and the general state of the economy.

Sector Research

Analysis of particular sectors or industries is the main goal of sector research. It involves assessing the financial performance of enterprises within the sector, industry dynamics, market trends, competitive environments, and regulatory developments.

Quantitative Research of Buy-Side Research

To analyze financial data and produce insights, quantitative research employs mathematical and statistical models. Designing investing strategies, creating and testing quantitative models, and doing quantitative analysis of market data are all included.

Environmental, Social, and Governance (ESG) Research

ESG research aims to assess businesses and investments using environmental, social, and governance standards. This process includes analysis of elements including carbon footprint, labor practices, board makeup, diversity and inclusion, and ethical issues.

Alternative Investments Research

Research on alternative investments includes non-conventional asset classes like commodities, real estate, hedge funds, private equity, and venture capital. It entails monitoring liquidity, examining risk-return profiles, appraising investment opportunities, and comprehending the particular traits and tactics linked to alternative investments.

Benefits of Conducting Buy-Side Research

Asset management companies and institutional investors can profit greatly from research research. These advantages and benefits highlight the critical role that buy-side research plays in assisting institutional investors and asset management companies in making investment decisions, managing risks, and achieving investment goals.

Benefits of Conducting Buy-Side Research

Benefits of Conducting Buy-Side Research

The following are some major advantages and benefits of buy-side research:

Enhanced Decision-Making

The research offers insightful analysis and data that help investors make decisions. It assists investors in making knowledgeable decisions regarding assets by conducting in-depth analyses of businesses, markets, and industries.

Risk Mitigation

Research conducted by the buy side is essential for risk management. It assists investors in reducing risks and making knowledgeable risk-return trade-offs by doing thorough analysis and due diligence.

Alpha Generation

Alpha, or excess profits earned above a benchmark, is what buy-side research attempts to produce. The research can help generate alpha and outperform the market by conducting in-depth analysis and spotting inexpensive securities or investment opportunities.

Portfolio Diversification of Buy-Side Research

It enables portfolio diversification by thoroughly examining various asset classes, industries, and geographical areas. Diversification increases the possibility for superior risk-adjusted returns while lowering concentration risk.

Competitive Advantage

Investment businesses can gain a competitive edge by conducting superior buy-side research. Buy-side research can assist investors in staying ahead of the market and spotting investment opportunities before they are generally known through proprietary research methodology, distinctive insights, and differentiated viewpoints.

Long-Term Perspective

A long-term investment horizon is frequently emphasized in buy-side research, with an emphasis on sustainable growth and wealth generation. Buy-side research urges investors to have a long-term perspective and steer clear of short-term market swings by examining the fundamental variables influencing investment performance.

Magistral’s Buy-Side Research Services

Magistral Consulting has helped numerous Investment Banks, Family Offices, Hedge Funds, and Private Equity firms in outsourcing buy-side research operations. It has clients based in the United States, the United Kingdom, Europe, and Australia.

Some of the services provided by Magistral Consulting for Buy-Side research are listed below:

-Hedge Funds, Family Offices, and Fund of Funds: Stock and Equity Research, Valuation and Equity Research, and, Manager Research.

-Private Equity and Venture Capital: Private Companies Due Diligence, List Bidding, Valuation, and Financial Modeling.

-Investment Banks: Research for Private Companies, Listed Companies, Asset Managers, and Real Estate (Housing, Infrastructure, Specialty Lodging, etc.).

-Corporate Mergers & Acquisitions: Target List Building, Due Diligence, Valuation and Analytics, Post-Merger Integration Support, and, Selection of the Right partners like Brokers, Investment Bankers, etc.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative: visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

The demand for family office help has increased as the number of wealthy families continues to rise throughout the world. Private wealth management advice companies known as family offices offer a variety of services to extremely wealthy people and their families. These services may include philanthropic planning, tax planning, estate planning, investment management, and more.

A family office’s main objective is to offer comprehensive and personalized service to accommodate each family’s particular demands. This strategy contrasts with conventional wealth management strategies, which frequently have a transactional mindset and emphasize items more than people.

Family offices can be set up in a variety of ways, including as a single-family office (SFO) or a multi-family office (MFO). SFOs are typically established by a single ultra-high-net-worth family to manage their wealth and affairs. MFOs, on the other hand, provide services to multiple families and can be a more cost-effective option for families with smaller net worths.

One of the main benefits of working with a family office is the level of personalized attention and care that families receive. Family office professionals take the time to get to know each family member, their unique goals and objectives, and the dynamics of the family. This allows them to create customized strategies and solutions that are tailored to the family’s specific needs.

Working with a family office has several other benefits, including the range and depth of services they provide. Families can combine their services with one provider, so they just need to engage with one advisor for all of their financial management needs. Their financial lives may become simpler as a result, and there may be less chance of a breakdown in advisor-client communication.

Family office can also give families access to specialized financial options that might not be accessible to the general public. This can involve making direct investments in private businesses, private equity investments, and more. Family office experts can aid in the development of varied and successful investment portfolios for families by utilizing their networks and specialized knowledge of the market.

Overall, family office offer a comprehensive and personalized approach to wealth management that can help ultra-high-net-worth families to achieve their financial goals and preserve their legacies for future generations. Whether working with a single-family or multi-family office, families can benefit from the customized services, unique investment opportunities, and high level of care that family office professionals provide.

Challenges Involved in Family Offices 

Family offices are faced with many obstacles that can make it difficult for them to achieve their primary goal of managing the wealth and assets of wealthy families. These difficulties may result from shifting family dynamics, technology improvements, and changes in the global economic environment. The top 5 issues that family offices confront will be covered in this post along with solutions.

Challenges in Family Offices

Challenges in Family Offices

Increased Accounting and Reporting Complexity

As family offices become more complex, there is an increased need for accurate and timely accounting and reporting. This can include financial statements, tax filings, performance reports, and other customized reports that meet the unique needs of each family. Family offices may also have to deal with complex tax and regulatory requirements, which can be difficult to navigate. To overcome this challenge, family office can invest in advanced accounting software and engage the services of a qualified accounting and reporting team.

Data Security

Family offices handle sensitive financial information, making them a target for cyber-attacks and data breaches. Data security breaches can have serious consequences for families, including financial loss and reputational damage. Family office can implement a variety of data security measures, such as firewalls, antivirus software, data encryption, and regular employee training to prevent data breaches.

Generational Change

As family offices transition from one generation to the next, there can be significant changes in the family’s investment objectives, risk tolerance, and governance structures. This can create tension between family members and make it difficult for family offices to maintain the trust and confidence of their clients. Family office can overcome this challenge by implementing effective governance structures, fostering communication between family members, and engaging the services of a qualified family advisor to facilitate the transition process.

Staying abreast of Technology

As technology advances, family offices must stay up to date with the latest developments to remain competitive. This can include the use of advanced analytics, artificial intelligence, and other technological tools to improve investment decision-making and portfolio management. Family offices can overcome this challenge by investing in technological infrastructure, hiring skilled professionals with expertise in emerging technologies, and engaging in ongoing training and professional development.

Scaling Staff Resources

Staff resources may become strained when family offices expand and take on more clients. This can involve difficulties in finding, educating, and keeping trained specialists with the requisite experience to satisfy the particular requirements of each family. Family office can overcome this difficulty by implementing successful recruitment and retention methods, such as providing competitive wage packages, flexible work schedules, and ongoing professional development opportunities. Family offices can also contract out some tasks to outside service providers to bolster their internal resources.

Overcoming Family Office Challenges

In managing their wealth, and assets, and meeting the requirements of their families, family offices encounter several difficulties. The top 5 strategies that family offices can use to meet these difficulties are as follows:

Overcoming Challenges

Overcoming Challenges

Accepting the selection procedure

The complexity of accounting and reporting is one of the biggest problems family offices encounter. Family offices should accept the selection process and thoroughly consider the available technological options to address this. Family office can narrow down their list of potential providers, make a thorough RFP (Request for Proposal), and assess the solutions in terms of features, pricing, and other aspects. This makes it easier to decide and identify the best solution to suit the requirements of the family office.

Looking for software that is appropriate for the task at hand and combines with existing solutions

Another key issue for family office is data security. Family office can get around this problem by choosing software that works well with existing systems and is appropriate for the task at hand. This aids in preserving data accuracy and speeding up data flows between various systems. Family offices can reduce security risks by selecting the proper provider with a data security and privacy track record.

Evaluating In-house versus outsourced solutions

Family office often face the challenge of scaling staff resources. They can overcome this by evaluating in-house versus outsourced solutions. Family offices can leverage outsourcing to augment their existing staff and supplement their capabilities. Outsourcing can help family offices tap into specialized expertise and reduce costs associated with hiring and training. On the other hand, in-house solutions provide better control over processes and foster better communication and collaboration among team members.

Considering security measures that go beyond technology

Family office should consider security measures that go beyond technology. They should set up strict policies and practices for handling sensitive data and educate personnel on data security best practices. This promotes safety awareness and culture inside the family office.

Closing the generational gap

Family offices must also contend with the substantial challenge of a generational shift. By fostering an atmosphere that encourages open communication and intergenerational collaboration, family offices can close the generational divide. This can be accomplished by establishing family councils, mentorship programs, and other programs that promote intergenerational sharing of knowledge and ideas. Family offices can equip the following generation to assume leadership roles and successfully manage the family’s wealth and legacy by fostering a culture of learning and development.

Magistral’s Services on Family Offices

Family offices provide a variety of services that help high-net-worth families manage their wealth and achieve their financial goals. We provide the following services to support Family offices:

Direct Investments

A family office can assist with direct investments in private companies, real estate, and other alternative investments. Family offices can provide deal sourcing, due diligence, and investment structuring services. They can also help with the execution of transactions, negotiations, and ongoing management of investments. Family offices with experience and expertise in direct investments can provide value-added services to families seeking to diversify their portfolios.

GPI/Hedge Fund Selection

Family office often work with a variety of investment managers and service providers to help clients achieve their investment objectives. A family office can assist with the selection of GPIs/hedge funds, performing due diligence, and negotiating fees and terms. They can also help with the ongoing monitoring of investment managers and their portfolios, providing regular updates to clients on the status of their investments.

GP/Hedge Fund Performance Monitoring & Reporting

Family office provide ongoing monitoring and reporting of GPI/hedge fund performance. They track and analyze the performance of investment managers, assessing their ability to generate returns and manage risk. Family offices also provide regular reports to clients, summarizing performance, and providing insights into the performance drivers of GPIs/hedge funds.

Portfolio Management

Family office provide portfolio management services to help clients achieve their investment objectives. They work with clients to design investment portfolios that are aligned with their goals, risk tolerance, and time horizon. Family offices can also provide ongoing monitoring and rebalancing of portfolios to ensure they remain aligned with clients’ investment objectives.

Fund Strategy of Family Offices

Family offices provide fund strategy services to help clients develop and implement investment strategies that are aligned with their goals. They work with clients to assess their investment objectives, risk tolerance, and time horizon and then design and implement investment strategies that are tailored to their needs. Family offices can also provide ongoing monitoring and reporting of fund strategies, ensuring that they remain aligned with clients’ objectives.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

An Outsourced Chief Financial Officer (CFO) is a financial professional who delivers CFO services to other organizations. They add value to the business by providing the same level of expertise as an in-house CFO but at a lower cost. These financial professionals assist firms in managing their finances, improving financial performance, and making sound business decisions.

Traditionally, CFOs were responsible for managing the finance department, supervising accounting processes, and verifying the accuracy of financial accounts. They were also in charge of the company’s financial health and offered high-level financial advice to the management team. The CFO function has developed over time to include a greater variety of tasks. CFOs nowadays are expected to be well-versed in economics, to have strategic business expertise, and to be able to drive advancement and creativity. They must also negotiate complicated regulatory settings while dealing with rising business concerns like market volatility, technology change, and global rivalry.

Outsourced CFO services have emerged in response to shifting expectations and demands placed on CFOs. Outsourced CFOs provide firms with access to high-level financial expertise and strategic assistance without the cost and commitment of hiring a full-time, in-house CFO. This adaptable and cost-effective solution has grown in popularity among startups, small to medium-sized organizations, and major corporations.

Benefits of an Outsourced CFO

Outsourcing CFO services may assist organizations of all sizes improve their financial performance, manage risks, and meet their financial objectives while saving time and money. Needless to mention the availability of talent and worldwide access to it without incurring significant operating costs. These abilities are merely at the disposal of a third party, from which organizations might gain.

Benefits of an Outsourced CFO

Benefits of an Outsourced CFO

Here are some of the advantages of hiring an outsourced CFO:

Knowledge and Skills 

An outsourced CFO delivers an abundance of financial skills and experience to a company without the expense of employing a full-time CFO. This enables organizations to gain access to the financial management skills required to make educated decisions and achieve their financial objectives.

Reduced Expenses

Instead of recruiting a full-time CFO as part of the team and incurring the additional price of covering their salaries and benefits, you can hire an Outsourced CFO for a fraction of the cost and obtain the same level of service as if you had a CFO employee within your firm.

Adaptability

Depending on the demands of the organization, outsourced CFOs might work part-time or full-time. This enables firms to obtain the required financial management assistance without committing to full-time employment.

Prioritize Business Affairs 

Outsourcing CFO services helps organizations focus on their core capabilities while experts handle financial management. Businesses can benefit from this by improving their overall performance and profitability.

Minimized Risk

A remote CFO can assist companies in managing financial risks such as credit, market, and operational risks. This can assist organizations in making educated decisions and avoiding costly errors.

Time Savings

An outsourced CFO maintains your financial strategy and aids you in ensuring you’re prepared for any financial emergency, with responsibilities for cash flow management, budget preparations, tax-saving plan, and contact with bankers, attorneys, and vendors.

Proficient

Outsourcing CFO services provide better professionalism, accuracy, and dependability in accounting service administration that meets the professional needs of enterprises and organizations.

Configurability

As a company grows, its financial management requirements may shift. Outsourced CFOs can provide scalable solutions that can adjust to changing corporate needs without requiring extra staff.

Choosing the right Outsourced CFO services

The suitable outsourced CFO should be a trusted partner who can provide your company with the financial management experience and insights it requires to succeed and develop. Outsourced CFOs can provide the business with perspectives that are unlikely to be found elsewhere. Furthermore, because of the nature of their job, they are usually up to speed on the latest software, tools, accounting standards, and trends in the industry.

Businesses can select an outsourced CFO who is the best fit for their specific needs and goals by taking these essential considerations into account:

Strategic Knowledge

Consider the outsourced CFO’s experience in the industry or market in which your company works. Look for an outsourced CFO with appropriate industry knowledge who can provide significant insights and recommendations to help the business succeed.

Services Provided

Examine the services provided by the outsourced CFO to ensure they are in line with your company’s specific financial requirements. Choose an outsourced CFO who can supply your firm with the services it requires.

Communication Skills

When working with an outsourced CFO, communication is essential. Look for a responsive outsourced CFO who communicates clearly and effectively. They should be able to convey financial ideas in simple terms to non-financial stakeholders.

Price Quoted

Consider the expense of hiring an outsourced CFO. While money is not the sole consideration, it is a crucial one. Look for an outsourced CFO who offers high-quality services at an affordable cost.

Availableness

Consider the outsourced CFO’s availability. Choose an outsourced, adaptable CFO who can meet your business’s needs.

References

Ask the outsourced CFO for references. Contact current and prior clients to learn about their experiences working with the CFO. This will allow you to conclude whether an outsourced CFO fits the business well.

Network

A capable outsourced CFO may cast a wide net for future referrals and obtain intelligent comments from their peers on a problem.

Education

A successful outsourced CFO should have a solid educational foundation in finance, accounting, or a comparable discipline, while also having extra certifications, industry-specific education, and continual professional development.

Magistral expertise in offering CFO services

Magistral provides Portfolio Management services for many types of company portfolios, such as Private Equity or a Venture Capital fund. We assist portfolio managers in centralizing their Marketing (primarily digital), Strategy (Fundraising and Exit), and Finance functions at a fraction of the cost of having specialized functions in each portfolio firm, large or small. The off-shored extended team also ensures no expertise is lost for similar projects across firms. Many company projects can run concurrently, prioritized according to the board meeting calendar. Of course, learning is interconnected across initiatives.

Magistral's Expertise in Offering CFO Services

Magistral’s Expertise in Offering CFO Services

Our portfolio and services that we provide are as follows:

Strategy — Identifying add-on acquisitions and potential purchasers, funding, exit plan, growth strategy, and content marketing.

Analytics — Financial reporting and analysis, dashboard creation, data visualization, text cleaning and mining, predictive modeling, KPI tracking, and web scraping.

Sales — List development, CRM cleansing and administration, competitive intelligence, and social media management.

Financial planning — Budgeting, predicting, and updating competitive quarterly earnings.

Procurement — Spend analysis, vendor identification and management, spend base cost reduction, category strategy, RFP support, and procurement strategy.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative: visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to  prabhash.choudhary@magistralconsulting.com

Introduction 

ESG is a framework that helps organizations and nations to monitor their progress toward their sustainability objectives. The effectiveness of an organization’s system of governance and its capacity to control its social and environmental repercussions are assessed using several non-financial measures. ESG Analysis aims to include all non-financial benefits and risks that are a regular component of a company’s day-to-day operations. These non-financial aspects are being used by investors more frequently as part of their analytical process to figure out significant challenges and potential for expansion.

Globally, the necessity for ESG investing has grown, and issues like socioeconomic inequality and climate change have taken on greater significance. Investors are looking for more sustainable locations to keep their money. To draw in ESG-conscious investors, several businesses are implementing ESG analysis and disclosing their progress in these areas.

Importance of ESG Analysis

ESG Analysis’s main objective is to ensure that business operations are conducted more responsibly. Business enterprises v their shareholders. Therefore, firms’ adoption of moral business practices to address ESG challenges is just as crucial as their operational and financial performance. To adhere to ESG rules, every company must be accountable for its duties towards the environment and the individuals who comprise the ecosystem, whether they be employees, clients, or other stakeholders.

Environmental Factors (“E”)

The way we create, use, and discard items around the world has a tremendous negative impact on the natural world. Possible hazards to the climate, the extraction and use of raw materials, deforestation, carbon footprints, energy efficiency, waste management, and the effect of human activity on biodiversity are a few of the considerations to be considered.

Social Factors (“S”)

In this case, the components are related to society, individuals, and the workforce as a whole. Social factors, such as human rights, equal compensation for equal work, worker wages, labor standards, privacy, human capital, and social justice problems, must also be taken into account. For any people-based firm, social factors are the most crucial element.

Governance Factors (“G”)

The process of ensuring that procedures are in place for assigning responsibilities within an institution is known as governance. Governance standards take into account the board’s composition, executive compensation, and transparency. Shareholder rights, risk responsibility, and CSR activities are a few examples of governance-related factors. It relates to the management’s capacity to fulfill its fiduciary duties to investors.

Benefits of ESG Analysis

For investors, businesses, and society at large, ESG analysis has several potential advantages. In the upcoming years, ESG investment is projected to gain popularity and mainstream acceptance as more investors become aware of these advantages. Some of the primary benefits of ESG are as follows:

Benefits of ESG Analysis

Benefits of ESG Analysis

Superior Risk Management

ESG-compliant businesses are more likely to have robust risk management procedures in place. This might lessen the risk of unfavorable occurrences that could harm the company’s financial performance, like natural disasters, labor disputes, or corporate scandals.

Constructive Effect on Environment and Society

Investors can support these programs and promote change by funding businesses that are dedicated to sustainability and social responsibility. ESG investing can also encourage companies to prioritize the welfare of all stakeholders, including employees, customers, and communities, and can motivate corporations to engage in ethical business practices.

Optimized creativity and competitive advantages

Businesses that strongly emphasize sustainability and social responsibility may be more inventive and competitive because they can better predict shifting market regulatory trends and cater to customer preferences.

Greater availability of funds

Strong ESG practices may increase a company’s access to funding since investors may be more inclined to make investments in businesses that share their values and adhere to ESG standards.

Minimize Portfolio Risk 

ESG investing can assist lower portfolio risk by steering clear of businesses that pose a high risk to the environment or have weak governance. Investors can lessen their exposure to potential risks and the effects of unfavorable occurrences on their investments by eliminating certain companies from their portfolios.

Distinguished Reputation and Brand Desirability

Customers, employees, and investors may have a higher regard for reputation and brand value for businesses perceived as socially and environmentally conscious. Loyalty, market share, and profitability may all rise as a result.

Steps Involved in ESG Analysis

ESG research is a crucial tool for investors who intend to synchronize their investments with their principles and positively impact the creation of a more fair and sustainable global community. Here are some steps that investors typically follow when conducting ESG analysis:

Steps Involved in ESG Analysis

Steps Involved in ESG Analysis

Specify Investment Goals

Determine how ESG criteria fit into the entire investing strategy by defining the investment objectives first. Investors should think about the ESG criteria that are most important to them and highlight any particular markets or industries that catch their attention.

Determine the ESG Factors

The next stage is to find the precise ESG indicators that apply to the investment. This could entail looking over ESG frameworks and alternatives, as well as locating any ESG risks that are industry-specific.

Data Collection

Investors should gather pertinent information about the company’s performance after identifying the ESG components. This might include looking over company reports, independent ESG ratings, and other information sources.

Data Analysis

The investor should review the information to assess how the company is performing in each ESG criterion. Identifying patterns over time, evaluating the company’s overall ESG risk profile, and comparing the company’s performance to industry benchmarks may all be part of this.

Include ESG analysis in investing decision-making

The final step is to include ESG analysis in the process of choosing investments. This could involve screening investment candidates using ESG data, giving ESG variables more weight in the investment research, and incorporating ESG concerns into portfolio management.

Magistral’s Services on ESG Analysis

Magistral brings years of experience to the table when it comes to evaluating investment prospects via an ESG lens, and it does so in a highly cost-effective manner by merging that experience with outsourcing to regions where the task could be completed efficiently. The distinctive benefits of Magistral’s solutions include reduced ESG operational costs and a panel of ESG specialists, SMEs, ESG consultants, and Investment Research.

When it comes to the gathering, handling, and presentation of ESG data, Magistral Consulting provides a broad range of data services. Magistral uses data research, data visualization, and ESG specialists to give a comprehensive view. The cost of data collection is further decreased by AI and automation techniques. All of the solutions are tailored to the demands of the asset managers to assist them in reaching a higher alpha. ESG research is conducted by a team of knowledgeable ESG analysts.

Magistral Consulting has globally assisted Hedge Funds, Bonds, Private Equity, Investment Banks, Mutual Funds, ETFs, and Venture Capital in analyzing ESG elements of investments. The following categories of solutions are provided by Magistral Consulting:

ESG policy and frameworks — Magistral Consulting makes sure that the right ESG frameworks and policies are applied to the organization to best meet its needs.

Due diligence — Carrying out thorough due diligence on the target firm, paying attention to its ESG compliance criteria as well as its financial and operational aspects.

ESG scoring, rating, and benchmarking — A value-added service where businesses are benchmarked, graded, and scored by the guidelines outlined in the ESG framework.

ESG compliance monitoring — Magistral Consulting also makes sure that businesses obey the rules when it comes to the regular operation of business operations inside the organization, in addition to benchmarking them by the standards outlined in the ESG framework.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative: visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

Businesses must strike a balance between costs, efficiency, and quality to remain competitive in today’s globalized economy. Outsourcing operations is one method businesses have been able to deal with these issues. Hiring an outside organization to carry out business operations that were previously done internally is known as outsourcing. Operations outsourcing is a subset of outsourcing that entails giving third-party service providers control over non-core corporate operations.
Operations outsourcing has become a popular practice for many businesses, especially for those in the manufacturing, logistics, and service industries. Outsourcing operations can help businesses reduce costs, improve quality, and increase efficiency by taking advantage of the specialized expertise and economies of scale of outsourcing providers. Companies can delegate activities such as customer support, accounting, data entry, procurement, and other non-core tasks to third-party providers who are experts in these areas, while they focus on their core competencies.
The ability to access new markets and clients without making significant infrastructure investments or recruiting more people is another benefit of outsourcing operations. By providing local skills and information in various regions and nations, outsourcing providers can assist firms in expanding their operations abroad.
Outsourcing business activities, however, may also come with certain disadvantages. The loss of control over corporate procedures and data is one of the main issues. To safeguard the protection of their intellectual property, sensitive data, and customer information, businesses must carefully choose outsourcing providers and create clear contractual agreements.
Moreover, outsourcing operations can also lead to job losses in the company, which can hurt employee morale and company culture. Therefore, companies need to communicate the reasons and benefits of outsourcing to their employees and involve them in the decision-making process to minimize the negative effects.

Types of Operation Outsourcing

The practice of using a third-party business to carry out specific business responsibilities on behalf of an organization is known as operations outsourcing. Depending on the unique demands and requirements of the organization, there are many different types and categories of operation outsourcing. Some of the most typical types and categories of operation outsourcing are listed below:

Back Office Outsourcing:

This type of outsourcing refers to the outsourcing of internal business processes such as accounting, human resources, payroll, and administrative tasks. It is a cost-effective way for organizations to focus on their core competencies while delegating these back-office tasks to specialized service providers.

IT Outsourcing:

IT outsourcing involves hiring a third-party service provider to manage an organization’s IT functions, including network management, software development, and infrastructure support. IT outsourcing can help organizations reduce costs, improve efficiency, and gain access to specialized expertise.

Manufacturing Outsourcing:

This type of outsourcing involves outsourcing the manufacturing process to a third-party company. The outsourcing company is responsible for all aspects of the manufacturing process, including raw material procurement, production, and quality control.

Call Centre outsourcing:

In this kind of outsourcing, call centers and other forms of customer care are outsourced to a different service provider. This can aid businesses in cost-cutting, efficiency improvement, and better customer service.

Logistics Outsourcing:

Logistics outsourcing involves outsourcing the transportation and distribution of goods to a third-party provider. This can include shipping, warehousing, and inventory management.

Knowledge Process Outsourcing (KPO):

KPO involves outsourcing high-level knowledge-based tasks, such as research and development, data analysis, and business intelligence. KPO providers offer specialized expertise and can help organizations improve their decision-making capabilities.

Legal Process Outsourcing (LPO):

LPO involves outsourcing legal services such as document review, contract management, and legal research. It is a cost-effective way for organizations to access specialized legal expertise without incurring the high costs associated with hiring in-house legal staff.

Challenges in Operations Outsourcing

While operation outsourcing can be very advantageous for businesses, several issues must be resolved to have a fruitful outsourcing collaboration. Some of the most typical difficulties in outsourcing operations are listed below:

Challenges in Operations Outsourcing

Challenges in Operations Outsourcing

Quality Control:

Maintaining quality control can be difficult when operations are outsourced to a third-party provider. Expectations may not match since the outsourced provider may follow different quality standards and procedures than the organization.

Communication:

Communication is essential in outsourcing operations since it’s critical to make sure the provider is aware of the organization’s needs and expectations. Ineffective communication can cause delays, mistakes, and misunderstandings, all of which can be detrimental to outsourcing collaboration.

Data Security:

Because sensitive information might be exchanged with the outsourcing provider, data security is a top issue when outsourcing processes. To protect the organization’s data, it is crucial to confirm that the outsourcing provider has put in place the necessary security measures.

Cultural Differences:

Cultural differences can pose a challenge in operation outsourcing, as the outsourcing provider may have a different cultural background and work style than the organization. It is important to establish clear communication and a mutual understanding of cultural differences to ensure a successful outsourcing partnership.

Lack of Control:

When outsourcing operations, the organization may feel like they have less control over the process and the quality of the work being done. This can lead to a lack of trust and a strained outsourcing partnership.

Cost Overruns:

Outsourcing operations may involve additional costs, such as setup costs and contract management fees. It is important to carefully evaluate the costs associated with outsourcing to ensure that the outsourcing partnership is cost-effective.

Legal and Regulatory Compliance:

Performing outsourcing activities may entail adhering to several legal and regulatory obligations, such as labor and data protection legislation. To prevent monetary and legal consequences, it is crucial to make sure the outsourcing provider complies with these criteria.

Magistral’s Operations Outsourcing Services

We provide organizations with a comprehensive range of services as an operation outsourcing provider to help them increase productivity, cut expenses, and concentrate on their core capabilities. Some of the services we offer to our clients are listed below:

Magistral's Services on Operations Outsourcing

Magistral’s Services on Operations Outsourcing

Back Office Support:

Data entry, document processing, record management, and other administrative chores are all part of the back-office support services we provide. Our team of skilled experts makes sure that all back-office tasks are completed accurately and effectively, freeing our clients to concentrate on their main company operations.

Customer assistance:

We offer customer support services such as live chat, phone support, email support, and social media management. To ensure that the customers of our clients are satisfied, and the reputation of their brands is upheld, our customer service team is trained to handle queries, complaints, and other customer concerns.

Accounting and Finance:

We offer accounting and finance services, including bookkeeping, payroll processing, accounts payable and receivable, tax preparation, and financial reporting. Our experienced team of accounting and finance professionals ensures that our client’s financial operations are compliant and up to date, providing them with accurate financial data for decision-making.

Human Resources:

We provide human resources services, including recruitment, onboarding, training, performance management, and benefits administration. Our team of HR professionals ensures that our clients have the right talent in the right roles, are compliant with labor laws and regulations, and are providing their employees with the support they need.

Information Technology:

Network administration, software development, cybersecurity, and technical assistance are among the IT services we provide. Our team of IT experts makes sure that the technology infrastructure of our clients is current and safe, giving them the resources they need to function effectively and efficiently.

Supply Chain Management:

We offer inventory management, logistics, and procurement as part of our supply chain management services. Our staff of supply chain specialists makes certain that our clients have the resources necessary to satisfy customer demand, control costs, and minimise risk.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

A crucial component of fund management in the realm of private equity and venture capital is soliciting money from limited partners (LPs). However, given the cutthroat environment of the investing sector, finding and interacting with potential LPs can be a difficult endeavor. A Limited Partners Database can be used in this situation as a strong tool to speed up the fundraising process and open up investment prospects. A Limited Partners Database is a thorough database of prospective investors interested in contributing money to venture capital and private equity funds. It helps fund managers, investors, and other stakeholders find potential LPs, interact with them, and manage their relationships with them. In this article, we’ll examine the value of a Limited Partners Database and all of its features and advantages.

The private equity and venture capital sectors prosper when they can raise money from investors to invest in ventures with strong potential for growth. However, the battle for capital has grown fierce as a result of the market’s growing number of funds and LPs. A well-maintained Limited Partners Database can give fund managers a competitive edge in this market. It provides a centralized database of data about possible investors, allowing fund managers to quickly find and target LPs compatible with their fund’s objectives and investment strategy.

Efficiency is a key advantage of utilizing a Limited Partners Database in fundraising. Fund managers can streamline their efforts by utilizing the database to manage investor relationships, track communications, and maintain up-to-date information on investor preferences and commitments. This allows for targeted communications and updates, enhancing the fundraising efforts by providing relevant information to potential LPs. Fund managers can also analyze investor data from the database to identify trends, preferences, and areas of interest, which can inform their fundraising strategies and increase their chances of success.

Due diligence is another crucial aspect of the fundraising process, and a Limited Partners Database can significantly aid in this process. The database provides valuable insights into potential investors’ historical investment activity, portfolio composition, and performance. Fund managers can analyze this information to assess the suitability of potential LPs based on their investment track record, risk appetite, and alignment with the fund’s investment strategy. This helps fund managers make informed decisions about partnering with the right LPs for their funds, mitigating potential risks, and maximizing returns.

Transparency and effective communication with LPs are essential for building trust and maintaining long-term relationships. A Limited Partners Database enables fund managers to generate timely and accurate reports on fund performance, distributions, and other relevant updates. It also helps in tracking investor inquiries, requests, and feedback, enabling fund managers to provide timely responses and address investor concerns. This transparency and effective communication foster investor confidence, strengthen relationships and increase the likelihood of repeat commitments from LPs.

Issues with existing Limited Partner Databases in market

Currently, there are some issues with the limited partner databases, available in the market. Let’s look at some of these major issues:

Issues with Existing LP Database in the Market

Issues with Existing LP Database in the Market

Lack of Accuracy and Reliability:

One of the primary challenges with limited partner databases available in the market is the accuracy and reliability of the data. The information on potential investors may not always be up-to-date, comprehensive, or verified. This can lead to incorrect or incomplete investor profiles, causing fund managers to waste time and resources on pursuing investors who are not a good fit for their fund.

Limited Coverage and Accessibility:

Another issue with some limited partner databases is the limited coverage of investors. Not all databases may have a comprehensive list of potential LPs, and some may focus on specific geographies or industries, limiting the options available to fund managers. Additionally, the accessibility of the database may be restricted, requiring costly subscriptions or memberships, which can be a barrier for smaller fund managers or startups.

Data Privacy and Security Concerns:

Privacy and security of investor data are critical concerns in today’s data-driven world. Fund managers need to ensure that the limited partner database they are using complies with data protection regulations and maintains robust security measures to safeguard investor information. Breaches or mishandling of data can lead to legal and reputational risks for both the fund manager and the LPs.

Incomplete or Inaccurate Investor Profiles:

Many limited partner databases rely on self-reported information provided by investors themselves. However, this can result in incomplete or inaccurate profiles, as investors may not always update their information or may provide inconsistent details across different platforms. This can lead to fund managers making decisions based on incomplete or unreliable data, potentially resulting in wasted efforts or missed opportunities.

Lack of Customization and Flexibility:

Some limited partner databases may lack the flexibility and customization options needed to cater to fund managers’ unique needs and preferences. Fund managers may require specific search filters, analytics, or reporting features to effectively identify and engage with potential LPs. If the database does not offer such customization options, it may limit the usefulness and effectiveness of the tool for fund managers.

Difficulty in Verifying Investor Credentials:

Verifying the credentials and legitimacy of potential LPs is a critical aspect of due diligence for fund managers. However, some limited partner databases may lack robust verification processes or rely solely on self-reported data, making it challenging for fund managers to assess the credibility of potential investors. This can expose fund managers to the risks of partnering with unsuitable or fraudulent investors.

Lack of Integration with Other Tools or Platforms:

Fund managers may use a variety of other tools and platforms to manage their fundraising and investor relations efforts. However, some limited partner databases may lack integration capabilities, making synchronizing data or streamlining workflows difficult. This can result in duplicate efforts, manual data entry, or inefficient processes, reducing the overall effectiveness of the limited partner database.

How Our Limited Partner Database resolves the issues

Our limited partner database has the following key characteristics and supporting activities to tackle the various issues with limited partner databases in the industry:

Our Limited Partner Database Resolves the Issues

Our Limited Partner Database Resolves the Issues

Comprehensive and Verified Data:

Our limited partner database addresses the issue of accuracy and reliability by ensuring that the data on potential investors is comprehensive, up-to-date, and verified. We use multiple sources to gather data and verify it through rigorous validation processes, ensuring that fund managers have access to accurate and reliable investor profiles.

Wide Coverage and Accessibility:

Our limited partner database offers wide coverage of potential LPs, including investors from diverse geographies and industries. We strive to provide an extensive and diverse list of potential LPs, giving fund managers a broad range of options to choose from. Additionally, our database is easily accessible without any costly subscriptions or memberships, making it accessible to fund managers of all sizes.

Robust Data Privacy and Security Measures:

We prioritize data privacy and security in our limited partner database. We comply with all relevant data protection regulations and maintain robust security measures to safeguard investor information. We ensure that investor data is handled securely and confidentially, mitigating the risks of breaches or mishandling of data.

Verified and Complete Investor Profiles:

Our limited partner database ensures that investor profiles are complete and verified. We use a combination of self-reported information and third-party validation to create comprehensive investor profiles, reducing the chances of incomplete or inaccurate data. This enables fund managers to make informed decisions based on reliable and complete information.

Customization and Flexibility:

Our limited partner database offers customization and flexibility options to cater to fund managers’ unique needs and preferences. We provide various search filters, analytics, and reporting features that can be customized to suit the requirements of different fund managers. This allows fund managers to effectively identify and engage with potential LPs based on their specific criteria.

Robust Investor Verification Process:

Our limited partner database has a robust investor verification process in place. We verify the credentials and legitimacy of potential LPs through multiple channels and sources, reducing the risks of partnering with unsuitable or fraudulent investors. This helps fund managers in their due diligence process and ensures that they can assess the credibility of potential investors accurately.

Integration with Other Tools or Platforms:

Our limited partner database is designed to integrate seamlessly with other tools or platforms that fund managers may use for their fundraising and investor relations efforts. We provide integration capabilities to synchronize data and streamline workflows, reducing duplicate efforts and manual data entry. This enhances the overall effectiveness and efficiency of the limited partner database.

Magistral’s Limited Partner Database

Limited partner databases are essential tools for private equity and venture capital firms to manage and leverage their investor relationships. These databases provide comprehensive information on limited partners, including their investment preferences, portfolio size, and track record, which can help firms identify potential investors and tailor their fundraising efforts. Here are some key services offered by our limited partner databases for clients:

Access to comprehensive and up-to-date investor data:

Limited partner databases offer access to a wealth of investor data, including contact information, investment history, and fund commitments. This enables clients to have a complete and up-to-date picture of potential investors, helping them make informed decisions in their fundraising efforts.

Customized search functionality:

Limited partner databases often come with powerful search functionality that allows clients to filter and sort investors based on specific criteria, such as location, investment size, or investment focus. This customization helps clients narrow down their search and identify the most relevant limited partners for their fundraising campaigns.

Secure and confidential data management:

Data security and confidentiality are given top priority in limited partner databases, protecting client and investor information from unauthorised access or breaches. Customers may rest easy knowing that their private information and investor relations are secure and handled in accordance with applicable laws.

Dedicated customer support:

We provide dedicated customer support and assistance to clients, ensuring that they receive prompt help and guidance when needed with the database. This can include technical support, training, and consulting services, helping clients maximize the value they get from the limited partner database.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

Industry Research refers to the process of gathering information and analyzing data related to a specific industry to identify trends, opportunities, challenges, and other relevant factors that may impact the industry. This research can involve various methods such as surveys, interviews, focus groups, data analysis, and market analysis.
The goal of industry research is to gain insights into the dynamics of a specific industry, such as market size, key players, regulatory environment, latest innovations, and emerging trends.
Businesses, investors, policymakers, and other stakeholders can use this data to make informed decisions and develop effective strategies.

Industry research can be conducted by in-house teams within a company or by outside research firms. The research findings may be published in industry reports, whitepapers, or academic journals. Industry research can help businesses understand their competition, customers, and market trends, as well as identify new opportunities for growth and innovation.

Importance of Industry research for investment analysis

Industry research is vital to companies and other decision makers because it offers an extensive understanding of a specific industry’s dynamics. Here are some of the main reasons why industry research is crucial:

Identifying opportunities:

Industry research can help businesses and investors to identify potential opportunities in a particular industry. By analyzing market trends and identifying gaps in the market, companies can develop innovative solutions to meet the needs of consumers.

Understanding the competition:

Industry research can assist businesses in better understanding their competitors and the strategies they employ. Companies can gain a competitive advantage by analyzing the strengths and weaknesses of their competitors.

Making informed decisions:

Industry research provides valuable insights that can help businesses and policymakers to make informed decisions. By understanding the current state of an industry, businesses can make decisions about investments, product development, and other important matters.

Keeping up with trends:

Research on the industry can assist organizations in keeping up with the most recent trends and advancements in their sector. This can aid them in maintaining their competitiveness and adjusting to market fluctuations.

Identifying potential risks:

Industry research can help businesses to identify potential risks and challenges in their industry. By anticipating these risks, companies can develop strategies to mitigate them and minimize their impact.

In order to make educated decisions, find opportunities, and maintain competitiveness in their sectors, corporations, investors, governments, and other stakeholders must conduct industry research.

How to do Industry Research:

There are various steps involved in industry research which are explained as below:

How to do Industry Research

How to do Industry Research

Conduct background research

To better understand your market, conduct extensive background study on your sector and rivals. Choose whether you want to investigate your whole industry or just a subset of it. Determine the topics you want your study to address, such as investment analysis, market growth, or industry standards. Make a list of your rivals and seek for ways to get information about them.

Collect your data

Gather information that can assist you in answering questions about the investment industry and your competition. You may also obtain extra information on the sector or any other issue by using secondary sources such as government statistics and data, financial reports, and journal articles. One may also collect data through the primary survey or through questionnaire.

Analyze your data

Analyze your data using tools or programing language. To examine the data you gathered, choose one form of industry analysis model. You may also compare your strengths with those of rivals to see how they stack up. When assessing data, consider the following elements that may have an impact on the figures:

Write the analysis

Present your results in a written report to make them easier to understand and share with others. It should use words, charts, and graphs to present the data and report your observations and respond to the questions asked in the goal section. Based on your study, list the long- and short-term impacts on the organization, as well as any potential future issues that may occur.

Evaluate your business

Use your report, particularly the analytical portion, and findings to help you decide on the company’s direction in relation to your emphasis area. For example, if you undertake industry research to see how quickly a competitor’s firm is developing and discover that they are growing at a rate of 12% per year, you may consider strategies to outperform that growth in your own business.

Tools and Techniques for Industry Research

There are various tools and techniques that can be used for industry research. Here are some of the most commonly used tools and techniques:

Market research surveys:

Surveys can be used to gather information from a large number of respondents about their opinions, behaviors, and preferences related to a particular industry. This information can be used to identify trends, preferences, and other insights.

Focus groups:

Focus groups involve a small group of people who are brought together to discuss a specific topic related to the industry. This can provide in-depth insights into consumer preferences, behaviors, and opinions.

Interviews:

Interviews with industry experts, stakeholders, and other key individuals can provide valuable insights into the industry. This can include information about current trends, challenges, and opportunities.

Secondary research:

Secondary research is gathering information from already published sources, including industry reports, scholarly journals, and other materials. This can give important historical context and industry insights.

SWOT analysis:

An industry’s strengths, flaws, opportunities, and threats can be found using the SWOT (Strengths, weaknesses Opportunities, and Threats) analysis, a strategic planning technique. Using this information, organisations can create plans that will maximise their strengths and minimise their flaws.

Porter’s Five Forces Analysis:

Another method for strategic planning that may be used to evaluate the competitive dynamics of a sector is Porter’s Five Forces Analysis. The threat of new competitors, buyer and supplier negotiating power, the threat of substitute goods and services, and the level of competitive rivalry are the five main aspects that are examined.

Data analysis tools:

Many different data analysis programs, including Microsoft Excel, Tableau, and SPSS, can be used to analyse and visualise data. Researchers can use these techniques to find patterns and trends in the data.

A combination of these tools and techniques can be used to provide a comprehensive understanding of the industry.

Magistral’s Services on Industry Research

Here are services offered by Magistral Consulting on Industry Research:

Magistral's Services on Industry Research

Magistral’s Services on Industry Research

Fundamental analysis: Magistral provides the customized model, quarterly earning reviews, equity, and industry themed report.
Credit analysis: The company provide the country risk analysis as well as company risk analysis which is very beneficial in industry research for investment analysis.
Quantitative analysis: The quantitative analysis includes data processing, data analysis and the commodities performance tracking and analysis.
Reports and Newsletter: Magistral provide the various industry report with the statistics and provide the event and news analysis

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

Corporate Finance is a subfield of finance concerned with how corporations handle funding sources, capital structuring, accounting, and investment decisions. Corporate finance is frequently charged with increasing shareholder value through long-term and short-term planning. Corporate finance activities range from capital investment to tax considerations.

In addition to capital investments, they are also given the task of monitoring cash flows, accounting, and preparing financial statements. Besides this, they carry out valuable activities like which investment activities need to be pursued. How do we pay for these investments via debt or equity etc? Also, decisions such as which shareholders should receive dividends and to what extent, fall into the purview of corporate finance.

How does Corporate Finance Work?

As it has been seen earlier corporate finance usually deals with maximizing returns to the shareholders of a company and its stockholders. Hence, it is but natural to observe that they are entrusted with organizational budgeting, investments, and capital allocation.

Functions of Corporate Finance

Functions of Corporate Finance

To illustrate this for example the corporate finance division may be given the task of computing capital requirements in order to acquire assets as well as find the most efficient sources of this capital acquisition. A key aspect of this decision-making is how do we finance this decision whether it be through debt or equity or both. At the same time, it requires one to make decisions that optimize working capital requirements.

It is necessary here to make a distinction between corporate finance and corporate accounting. The main difference here is that the corporate finance team is entrusted more with the strategic aspects of a decision such as a strategy formulation, planning, and directing while the corporate accounting team is entrusted with the day-to-day management of business and activities such as maintaining accounting records and preparing financial statements.

Principles of Corporate Finance

There are a few principles that guide the corporate finance function. They are as follows:

Principles of Corporate Finance

Principles of Corporate Finance

Investment principle –

This emphasizes the importance of weighing risk versus return. The evaluation of an investment proposal should be based on a hurdle rate that serves as a benchmark. It is important to ensure here that the risks do not overtake the returns.

This primarily requires thoughtful planning and deciding where to invest from a long-term perspective. This means deciding after a careful analysis as to whether or not to pursue an investment activity and whether to invest in a manner such that the highest risk minimized returns are got by the company. To accomplish this financial accounting tasks such as identifying capital expenditures, estimating cash flows, and comparing planned investments with projected income are used. Besides, financial modeling is also used with the help of techniques such as IRR and NPV to compare projects and choose the right ones

 Financing principle –

It emphasizes on maximizing returns from a given investment. Here the task is to assess which financing technique to use namely debt financing, equity financing, or a combination of both. Important considerations here are factors such as business structure and goals, cost of financing, interest rate calculation, and access to the equity market.

This activity is mainly associated with delving into which is the optimal way of financing a given project. The decisions include assessing factors whether to use debt, equity, or a mix of both. In the end, it is the job of corporate finance professionals to optimize the company’s capital structure by reducing its weighted average cost of capital (WACC). 

Dividend principle –

In this the key question is whether to streamline surplus towards business or distribute the dividends amongst the shareholders. Retained earnings that are not given back to the shareholders can be used to fund a business’s expansion and are one of the best sources of funds as it does not lead to accumulation of debts nor does it lead to a dilution of equity by the issuance of more shares. Similarly, another key decision could be to distribute dividends so as to create wealth for the shareholders thereby leading to better brand equity.

Types of Corporate Finance

There are a number of types of corporate finance for growing businesses. Some might prefer bank overdrafts, fixed term loans or others might prefer trade finance, leasing, venture capital, partners, etc. These are majorly defined in two types of corporate finance:

Short-term corporate finance:

These are the tools used when a business requires funds for a short period of time, say less than a year. These are commonly one-time loans and are beneficial when one is not able to get loans for a long tenure. Some of the examples of short-term corporate finance are:

-Bank Overdrafts

-Trade Credits

-Accrual Accounts

-Financial Lease

-Operating Lease

-Hire Purchase

Long-term corporate finance:

These are the loans that one repays over a period of one year or much longer than that, generally month-to-month installments. The benefit is that one gets the loan at minimum rates as well as minimum monthly payments as it spread out over the years. Some of the common long-term corporate finances are:

-Bank Loans

-Merchant Loans

-Debentures

-Equity Issuance

-Floatation

-Stock Dilution

Magistral’s services on Corporate Finance 

Some of the services that are associated with corporate finance that are offered by us are as follows:

-Fund Strategy: Finding growth potential, investment activity, investment sizes, and macro-economic factors for a specific industry, geography, or an investment philosophy

-Investor profiling: Finding out the set of right investors for your fund or other investing opportunity and profiling it for further actionable details

-Investor communication: Periodic update of MIS, reports, fund-performance, valuation metrics, fund-raising progress, and others for Boards and Investors (LPs and GPs).

-Content marketing: Creation of well-researched Thought Papers, PoVs, Case Studies, Market Reports, Industry Reports, Company, and News analyses.

-Modeling and valuations: LBO and DCF Modelling, Precedent Transaction Analysis, Merger modeling, Sum of Parts Analysis, Sensitivity Analysis, Equity Analysis, Comparable analysis

-Real estate financing models: Rent Vs. Sell Analysis, Rent Vs. Buy Analysis, Rent Roll Analysis, Property Price Trends, Sell Vs Construct and Sell Analysis

 Typical outcomes of our financial modeling services are –

– Independent and insight-based asset valuations

-Reduction in operations costs

-Leverage to negotiate a better valuation

-Exhaustive analysis to get other co-investors for an asset

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

A Limited Partner is a part-owner of a business whose liability for the company’s obligations is limited to the amount invested in the industry. Limited partners are frequently referred to as “silent partners. It is usually those investors whose personal liability is limited to their stake. Most limited partner investors are “passive” investors. The word “limited” in the title is restricted. The term usually references their legal standing in Venture Capital or Private Equity funds. They’re essentially partners in such a fund, but their rights and duties are limited. Control is not a priority for fixed partner investors. They also do not have access to their funds or receive frequent updates on the status of their investment. Of course, this is not mean that they are uninterested.

Leading investment deals by limited partners across India

Leading investment deals by limited partners across India

If you need to generate funding for your business from a few investors while maintaining complete control. In that case, a limited partnership is for you—people in your neighborhood, particularly the 3Fs (family, friends, and ‘fools’).

Importance of Limited Partnership

Limited Partnerships are great for obtaining money for a specific investment or collection of assets. They enable limited partners to invest while also limiting their responsibility. Limited partnerships are great for securing money for a particular acquisition or group of assets. They allow limited partners to invest while also limiting their responsibility. One of the most significant advantages for a limited partner in a restricted partnership is that their commitment is minimal. If the company goes bankrupt or is sued, the limited partner is only liable for his investment and the company’s assets. The real advantage of limited partnerships is that personal liability for corporate obligations is reduced. Limited partners can only be held personally liable for the amount they invested. Limited partners have a safe investment because they cannot lose more money than they invest.

 How to find Limited partners

The following are some techniques for finding limited partners:

How to Find Limited Partners

How to Find Limited Partners

Leveraging your network

The most excellent place to begin is within your network or on its outskirts. Depending on what you were doing before you had your Eureka moment and decided to focus your efforts on creating a business, you may already have an extensive network waiting to be tapped into. This can extend beyond the 3Fs. So, before you widen your search, exhaust those options in terms of contacts and reliable ‘friends of a friend’ looking to invest in a business.

It is advised that you and your partners interact with your network of GPs, Founders, friends, and family to organize a successful fundraising campaign. This will most likely be the primary source of your fundraising efforts if you have an extensive network. According to our research, the amount one can raise from their internal network is a significant indicator of the size of your entire capital. As a result, we recommend multiplying your firm commitments from your internal network by ten to determine your ideal fund size. This is the one way to Limited Partner Reach-out.

Connectors:

Using existing contacts inside your company to link you with potential investors is one of the most acceptable methods to meet new Limited Partners. Connectors are often well-connected individuals in Venture Capital who can open their networks to help you obtain money quickly. They might be one of your most valuable assets for fundraising and  Limited partner Reach-out.

Connectors enable you to utilize and expand your network, increasing your capacity to significantly meet and raise cash from Limited Partners. These can include Founders, other Venture Capitalists, Limited Partners, and anybody who can connect you to a pool of HNWIs interested in investing in the asset class.

Events and conferences:

Events and conferences are an excellent way to broaden your horizons. However, venture conferences often pitch to your LPs who have already committed. Conferences like Slush, TechCrunch Disrupt, South by Southwest, and RAISE might help pitch LPs; attending them only to discover new ones is a poor approach. These conferences will play a role in your fundraising efforts and Limited Partner Reach-out.

Cold outreach:

Even if you aren’t fundraising, you may strive to broaden your network and form new connections. Cold outreach is an excellent technique to achieve this, and some of the most experienced Venture Capitalists do it. The caution is that a cold outreach effort might be useless unless adequately implemented. In your cold outreach, you may target HNWI and Family Offices because they are often the best investors for new fund managers. This is the best way to reach out to limited partners. Keep your eyes open for opportunities at networking events and meetups and local business meetings and seminars. Regular face-to-face interactions can help you form a deeper relationship and better understand each other’s requirements. Don’t hurry into a lousy partnership because you’ve set a self-imposed deadline for yourself. Take your time interviewing possible business partners and researching each option extensively for Limited Partner Reach-out.

How to engage with the potential Limited Partners

Finding a prospective shortlist is the first step; communicating with them is the second. As you may expect, many people are contacting them for the same reason you are. As a result, you must persuade them to put their money in your hands. The most crucial thing is that your pitch isn’t flawless. Understanding the profile of investors, you want within your fund can help you locate the proper LPs for your fund. This depends on various criteria, including geography, stage, and emphasis sector, to mention a few. Make sure you concentrate your efforts on highly relevant individuals who have the financial means to contribute to your fund. We recommend focusing on the proper sort of investor to Limited Partner Reach-out.

You must share the same values in order to approach a business for a partnership. It would be beneficial if you looked for a partner with complementary skills. Make every effort to clearly explain your partners’ responsibilities and tasks. Check to see if the business structure is appropriate for you. Don’t waste your time on it. Make it appear credible in writing. You must be honest with one another.

Be prepared for the pitch:

The investment pitch for your limited partnership is convincing, informative, and highlights what makes your firm distinctive and worth a potential investor’s time and money. Because your fund is new, you won’t be able to depend on previous institutional success. Instead, investors will be impressed by your personal history, philosophy, and investment knowledge. Most experienced LPs have similar questions regarding potential funds, so be prepared to address the most popular ones. What is your team’s track record (either collectively or individually)? How well do you guys collaborate? What is your investing strategy, and how do you choose investments?

Make sure Limited Partners is a good fit for you:

Not every investor is a suitable match for you and your business. They are researching investor fit before pitching will help you work more strategically and save time to Limited Partner Reach-out. Consider the value and role you require from your LPs. Obtain as much information about potential investors as possible: What inspires them? In the past, who have they collaborated with? Read the website if they have one. Examine any articles they’ve published as well as their social media accounts. Please don’t hesitate to ask questions while meeting with LPs to qualify their interest further and fit with your fund.

Magistral’s Services on Limited Partner Reach out

-LP Research: Global listing and profile of all LPs who have invested in funds or opportunities like yours. Provide customized research database of limited partners.

-Limited Partner Reach-out: Contact LPs to establish a link between the GP and relevant LPs. Emails, social media, and phone calls communicate and reach out to limited partners.

-Events Support: Listing all relevant events in your business, locating attendees, scheduling your presence, and assisting you in developing material and profiles for the event.

-Meeting Support: Content preparation, previous investments, partner profiles, and anything else that can aid you in the meeting.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

An Investor Database is a list of individuals engaged in investing activity that is used to create targeted marketing campaigns. A variety of sources create investor databases, which are typically guarded closely because they have the potential to be highly valuable. A fee is normally associated with accessing an investor database, which is charged for each entry. Instead of scouring the entire database, they are permitted to search by specified criteria, such as looking for investors in particular demographic groupings.

Investor Databases can include information on both individual investors and institutional investors, such as venture capital firms, private equity firms, and hedge funds. They may also include information on angel investors and crowdfunding platforms. Investor databases can be a valuable tool for companies and investment firms, as they can help to identify and target potential investors who are most likely to be interested in a particular opportunity.

An investor database offers a variety of information. To paint a picture of the types of investments that interest the people on the list, names, contact information, and information about investment history is provided. Databases can also gather information on racial background, marital status, earnings, and other things. Surveys and other methods are used to gather this data, which can be used in marketing campaigns in a variety of ways.

Investor Database Utilization

People looking for investors may utilize an investor database to create a target market and then advertise to those consumers to generate initial interest and start an investment. For those looking for a specific type of investor, such as a philanthropist interested in charitable activities, specialty goods like databases of high-net-worth investors are available. The search will produce a list of investors that fit the search criteria, and the user can make contact with investors from that list as needed.

Considering that businesses are legally permitted to retain and disclose information about their consumers, individual investors have no choice over whether their names appear in an investor database. As corporations may be required by law in some locations to establish opt-out systems where customers can decline to allow their data to be shared, it may be possible in some circumstances to limit the release of the data. Because these parties are exempt from the same legal restrictions as corporations tracking customers, it is more difficult to opt out when databases are produced by third parties.

Complete access to an investor database is an option, although it is typically highly expensive and allows users to search through all listed investors. For processing all the database entries, users often need statistics software and other tools because doing so would be too much information to take in all at once. Since the original database owner does not want the product to lose value, those with full access are typically not allowed to sell the data they acquire.

Features of the Investor Database from Magistral

Following are the features of Investors Database from Magistral:

Features of the Investors Database form Magistral

Features of the Investors Database form Magistral

Updated Data

The investor database requires frequent updating of fresh quantitative and qualitative data. The database gains a competitive advantage over its rivals by continuously adding newer participants, while also satisfying the customers who have paid for the service. Numerous experts continuously update Magistral’s investor database at any given time.

Data Accuracy

Accuracy is essential when selecting an investor database. Unquestionably, the data was obtained from reliable international sources by a third-party data supplier. Government listings, business directories, trade exhibitions, websites, reputable publications, opt-in email addresses, and other reliable data sources are a few examples. Furthermore, outdated information is useless. The buyer needs to confirm that the provider performs regular audits to maintain the accuracy and usefulness of the investor database. Important investment decision-makers can be engaged with and turned into qualified leads using a complete purchase-ready database. Magistral gives verified information that it obtains from all reliable sources.

Affordable Prices

Pricing is a key factor when purchasing an investor database. Data is provided for free by some database providers. However, the database can be constrained or have blank or old data fields. As a result, when looking for a provider of investor databases, the price should be considered while ensuring that the other services are offered. Magistral’s investor database offers the finest value, which is merely a few thousand dollars in price.

Additional Services

Any Investors Database’s value is increased by offering additional tailored services in addition to the database. It is difficult to find specialized leads of general partners, limited partners, angel investors, and other investors. Therefore, providing them will be a tremendous benefit. There are countless options available when it comes to acquiring investors for the desired business. The data will be very difficult to categorize, wasting time and lengthening the process in general. To separate data based on the investor’s industry, investment type, and other characteristics, a database solution should be considered. An investor database should categorize and respond to these queries based on investment emphasis, kind, prior investments, and geographic location. One can quickly search the database for investors who are suited for the company thanks to the categorized data. As a result, more time can be spent on creative marketing and fundraising campaigns and less time may be spent exploring data.

The investor database ought to offer the option of a custom search. Once the target investor has been identified, bespoke search enables leisurely data browsing rather than going through each contact. An investor can be looked up by name, type from a dropdown menu, market, or location, depending on where they frequently invest. Using a tailored search, a decent investor list can be obtained in a matter of seconds without having to browse the full investor database.

The investors’ database at Magistral offers flexible search options. Additionally, it provides tailored services for lead creation based on the unique needs of the customers.

Magistral’s Investor Database Composition

From Limited Partners, General Partners, HNIs, and other investors around the world, Magistral offers hundreds of leads. Information about a lead includes their name, phone number, verified email address, company name, address, and investment mandate. A single-user subscription to Magistral’s vast investor database costs $2500 and has a 6-month access period. Additionally, 500 bespoke leads that have been properly tailored to specifications are offered. The primary information sources for the database include a continual secondary internet search, recommendations, and personal contacts. The database is regularly updated by a dedicated team. The database complies with GDPR, but the user is still responsible for making sure that leads are provided with relevant information and the necessary disclaimers. The internal staff at Magistral finds these leads while working on various fundraising initiatives and maintains the company’s investor database. These leads are reliable since they have been utilized to raise money in the past. Customers on a limited budget who wish to get started with the least amount of money necessary can also use this database. Emerging managers or unfunded startups may be among them.

Benefits of Magistral’s Investor Database

Our Investor Database comes with various benefits to suit your requirement:

Benefits of Magistral's Investors Database

Benefits of Magistral’s Investors Database

-Support from analysts for custom research.

-Online product with simple login and search options.

-APIs for transferring data between your current systems.

-Assurance of relevant leads.

-Have access to up to 4500+ limited partners, 9000+ general partners, 6000+ angel investors,   3000+ HNIs, and others.

-Work more productively and generate money more quickly than you otherwise could.

-By establishing direct, beneficial partnerships, you can increase the coverage of your press   release or newsletter mailing.

-Arrange additional in-person meetings and conference calls with prospects.

-Make use of the time our team spent creating the investor database to maximize the time and   effort put in by your company.

-Give your team the tools they need to follow up on leads from trade shows and meetings.

-Reach concentrated pools of high-net-worth and ultra-high-net-worth investors.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction to Equity and Country Themed Reports

Foreign securities account for a significant part of many investors’ portfolios. This selection requires a thorough examination of numerous mutual funds, exchange-traded funds (ETFs), and stock and bond offerings, yet investors sometimes overlook a critical first step in the foreign investing process. The first step in deciding to invest abroad is to assess the volatility of the investment environment in the country in question. Equity and country-themed reports for hedge funds are created to find any country risk associated with the economic, political, and business risks peculiar to a particular country and could result in unanticipated investment losses. In general, countries are divided into three categories based on their level of development: frontier, developing, and developed markets, with decreasing levels of national risk. Various criteria and studies can assess country risks, such as sovereign credit ratings and independent sovereign risk reports.

Factors in Equity & Country Themed Reports for Hedge Funds

Following are the factors in Equity & Country Themed Reports for hedge funds-

Factors in Equity & Country Themed Reports for Hedge Funds

Factors in Equity & Country Themed Reports for Hedge Funds

Economic Risk

Economic risk is the ability of a country to repay its obligations without any difficulties. A country with sound finances and a thriving economy should be able to give more trustworthy investments than one with shaky finances and a poor economy. Examining a country’s economic and financial foundations is crucial in deciding on an investment. Different analysts use different metrics when assessing an investment abroad, although most experts look at a country’s GDP, inflation, and consumer price index (CPI) readings. Investors should also consider the country’s financial market structure, the availability of appealing investment options, and the recent success of the local stock and bond markets.

Political Risk

This risk is linked to a country’s political policies that could result in an unexpected loss for investors. While economic risk is often defined as a country’s ability to pay its obligations, political risk is its willingness to repay loans or keep an investment-friendly environment. Even if a nation’s economy is good, the country would not be a worthwhile investment candidate if the political atmosphere is hostile to outside investors (or grows hostile).

Sovereign Risk

There is the danger that a foreign central bank would change its foreign exchange laws, lowering or cutting the value of one’s foreign exchange contracts significantly. Both equities and bond investors receive help from analyzing sovereign risk variables, while bond investors may benefit more directly.

A sovereign risk analysis can help create a macroeconomic portrait of the operating environment when investing in the shares of specific companies in a foreign country, but most research and analysis will need to be performed at the company level. If an investment is to be done directly in a country’s bonds, though, assessing the country’s economic state and strength can be an intelligent approach to assess a bond investment. The country’s potential to grow and create revenue is the underlying asset for a bond.

Social risks

The investment world in recent times has recognized that poor management of environmental and social issues and poor governance practices associated with business activities can create business risks and various difficulties for the financial institutions financing it. Environmental and social risk assessment and risk management have been needed. Production delays, accidents, threats to operating licenses, unplanned expenditures, and unwanted publicity can result from a business’s environmental and social risk impacts, whether real or perceived. Distinct investments have different environmental and social hazards based on the sector and country. The IFC Environmental and Social Performance Standards point out a minimal degree of environmental and social responsibility obligations in developing nations. The emphasis is on the methodical management of environmental and social challenges, which often needs the implementation of a customized environmental management system.

 Credit Ratings

Countries get credit ratings the same way firms do to figure out their ability to repay debt. Every investable country is given ratings by Moody’s, Standard & Poor’s (S&P), and other significant rating agencies. A country with a better credit rating is regarded as a more secure investment than one with a lower credit rating. Examining a country’s credit ratings is great when evaluating a potential investment.

Assessment in Industry Reports for Hedge Funds

Apart from the equity and country-themed reports for hedge funds, industry reports are also sort after as they give a better understanding of their working territories for hedge funds. They also get detailed information on all the concerned datasets essential for their operations to assess and manage them in a better way. The equity and country-themed reports for hedge funds, and an industry report will give much data for their consideration so that they do not make any errors in the early assessment period and conduct their operations smoothly. The industry report will have information on country-themed various aspects of their trade, while the critical points they cover are briefed below:

Assessment in Industry Reports for Hedge Funds

Assessment in Industry Reports for Hedge Funds

Assets under Management

The rise in hedge fund assets under management can be attributed to several variables. This exercise has included more jurisdictions, making the results more reflective of the global hedge fund sector. Furthermore, market forces are likely to have influenced this increase. Because most hedge funds focus their strategies on equity markets, the rise in valuations, particularly in equities markets, may have boosted the Assets under Management of some hedge funds. When considering the increase in the number of funds, a more significant increase in total Assets under Management might have been predicted.

Investment Strategy

Hedge funds are a broad umbrella term. Funds will seek specific investing strategies within that broad group—most of these fall into one of a dozen or more primary strategy types. Short positions are still under pressure as markets have continued to increase over the last few years. With rising losses, long/short strategies have shifted to align with long bias, yet they still are popular. Another factor contributing to the fall in long/short strategies is the internal “onboarding” of long/short strategic decision-making as large institutional investors look to bring such management in-house. As a result, many long-term hedge fund investors are no longer interested in such product offers.

Investment Exposures

The disparity between hedge funds’ short and long positions, said as a percentage is known as net exposure. A lower degree of net exposure reduces the risk of market changes affecting the fund’s portfolio. A fund’s net exposure should be examined alongside its gross exposure. Overall, sovereign bonds and cash equities have the highest long and short exposures in cash securities, excluding IR and FX derivatives, while equity derivatives have the most extensive derivatives exposures owned by funds. On a gross basis, interest rates and foreign exchange futures are the most significant exposures owned by qualifying hedge funds worldwide.

Leverage

Hedge funds use leverage to expand their investment exposure. Leverage allows a fund to raise its potential gains (and losses) by increasing the fund’s market exposure beyond its net asset value by employing financial instruments or borrowed money. Leverage can take many forms, including debt borrowing (also known as financial leverage) or certain types of derivatives (also known as synthetic leverage), and hedge funds are typically exempt from strict regulatory leverage limits and other soft “leverage requirements” such as asset concentration limits.

Services offered by Magistral Consulting on Equity and Country Themed Reports

The Equity and Country themed reports for Hedge Funds provided by Magistral Consulting offer a complete analysis of the above-said areas while also supplying a detailed and structured take on the entire target country that is to be sought after for the investment. This report will most importantly help reduce the operations costs for the hedge funds as the detailed report will help them make thoughtful decisions on their operations, moving away from those investments that are considered a liability for them. The equity and country-themed reports will also improve their alpha as the return of investments for the hedge funds will increase from the report’s input, positively changing them.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is in Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

Private equity is a term used in the finance sector to describe investments made directly into a business by some investors and private equity organizations. Institutional investors typically make private equity investments in venture capital funding or leveraged buyouts. Private equity can be used for various goals, including technology upgrades, business expansion, acquisitions, and even the revival of a failed organization.

Private equity investors often have a 5-7-year investment horizon and expect to leave after making a significant return on their investment. Private equity investors might use various exit strategies to get their money back. Private equity (PE) has been the expansion engine for a while. The primary goals of this industry are evolution and productivity. Private equity refers to capital that is not traded on a public market and is invested in a long-established industry that is not functioning well or is about to fail. Venture Capital, Growth Capital, Leveraged Buyout, Mezzanine Debt, and Distressed Debt are the five main types of PE. A venture capitalist, often known as a “venture capitalist,” comes to their aid by offering risk-bearing funds. Institutional and individual investors contribute funds to private equity, which can be used to fund innovative technology, boost working capital, or consolidate a balance sheet.

Standard Modes of Private Equity’s Exit Strategy From Portfolio Companies

Exits are of crucial importance to Private Equity investors, and they consider a variety of different exit strategies to realize their return on investment. Some of the most common Private Equity exit strategies include:

Standard Modes of Exit Strategy

Standard Modes of Exit Strategy

Initial Public Offer (IPO)

One frequent method is to launch a company’s public offering and sell its shares to the public as part of the IPO. Depending on the situation, shares might be sold at once. Shares assigned can also be sold when the company is listed and the shares begin trading on the exchange. Because of the required costs, stock market flotation may only be employed by giant corporations, and it must be financially sustainable.

Strategic Acquisition

A strategic buy or trade sale is another choice, in which the business is sold to a different suitable company and a portion of the sale earnings is received. One of the most typical methods for private equity funds to exit is this one. The buyer will typically profit strategically from purchasing this business because their strengths may compliment one another. As a result, the buyer frequently pays more to purchase such a business.

Secondary Sale

The private investors can sell the acquired stake in the company to some other private equity group in a secondary sale. The secondary sale might happen for a variety of reasons. For example, the business may demand additional funds above the current equity fund’s capability. Alternatively, the company may have reached a point where the earlier private equity investors wanted it, and additional equity investors wanted to take over.

Repurchase by the Promoters

It is another effective exit plan in which the company’s management or promoters buy back the equity position from private investors. For both investors and management, this is an appealing exit option.

Liquidation

It is the least desirable choice, but it may be necessary if the company’s promoters and investors have been unable to run the business successfully.

Key Considerations and Trends in Private Equity’s Exit Strategy From Portfolio Companies

Key Considerations and Trends in Exit Strategy

Key Considerations and Trends in Exit Strategy

Preparing the Portfolio Company for Sale

Private Equity investors, being financial investors with an investment philosophy of creating returns on their investments, typically keep a close eye on the company’s performance and engage in strategic choices that may affect valuation (especially as their investment horizon approaches). Furthermore, as part of a portfolio company’s ‘clean-up’ prior to an impending sale, another emerging trend is to refinance or repay the company’s existing debt to be able to, among other things:

-Displaying a solid balance sheet to potential incoming buyers

-If any, obtaining a release of encumbrances over shares of other shareholders that may be relevant for a bulk sale.

Partial Exit

Retaining a majority interest or control rights in a publicly traded firm after a partial exit may expose the Private Equity investor to be classed as a promoter or “co-promoter.” Partially exiting from a private firm carries the risk of the Private Equity investor losing control and piggybacking on the founders’ or private equity’s exit strategy from portfolio companies.

Use of Insurance Product

Most Private Equity investments are made through funds with a short life expectancy and internal constraints on taking general indemnity obligations, including uncapped indemnities. As a result, using an insurance product to supplement, and in some circumstances completely replace, the indemnification structure that sellers may provide in such transactions is becoming increasingly prevalent.

Severance Payouts or Compensation Arrangements

Without the approval of the board and non-interested public shareholders, a Private Equity investor cannot enter compensation or profit-sharing arrangements (including severance payout arrangements) with the promoters, directors, or key employees as part of its exit strategy from a publicly traded company to incentivize them by sharing returns beyond a hurdle rate.

Guaranteed Returns

Much debate has surrounded the question of whether a foreign investor’s exit option can be at a pre-determined valuation while still guaranteeing returns. Indian courts have recently demonstrated a greater willingness to uphold indemnity and damages claims, even when the underlying contractual commitment conflicts with Indian exchange control prohibitions on guaranteed returns.

Tax Considerations

There may be different tax implications depending on the cost of buying shares and the difference between the purchase value and the final sale price. To minimize further tax implications, ensure those indemnification payments are not treated as income and are instead adjusted as capital gains. Exit structures must also be implemented to minimize tax exposure and prevent violating India’s “general anti-avoidance regulations.” In transactions involving selling shares by a non-resident private equity investor to another non-resident private equity investment, indemnities for potential indirect transfer taxes become an essential part of the share purchase agreements.

Enforceability of IPO provisions

Given that all the business’s directors sign the IPO offer documents, the directors’ fiduciary duties may prevent the company from conducting an IPO on terms dictated by Private Equity investors if the directors believe the IPO was not in the shareholders’ best interests. In addition, the corporation must have a proven record of profitability and net worth and a minimum amount of net tangible assets, among other requirements. As a result, the enforcement of IPO requirements in shareholder agreements has yet to be proven.

Locked-box vs Completion Accounts

There are two methods for making post-completion adjustments: completion accounts or a locked-box approach. A locked-box method is efficient since it ensures pricing certainty and saves management time and effort to prepare completion accounts. However, under a locked-box system, the negotiated post-signing interest that must be paid together with the purchase price may not be enough to balance the impact of intermediate activities that must be reflected into completion accounts.

Number of private equity and venture capital exits across India

Number of private equity and venture capital exits across India

Value of Private Equity anad Venture Capital Exits

Value of Private Equity and Venture Capital Exits

Magistral’s services on Private Equity’s Exit Strategy From Portfolio Companies

Magistral’s successful exit strategy specifies existing owners’ procedures to separate themselves from the company. The extended off-shore crew also assures that no expertise is lost across firms for similar projects and that numerous projects in several companies can run simultaneously, prioritized according to board meeting schedules. Unanticipated events may necessitate the implementation of a corporate exit strategy.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is in Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

Sensitivity Analysis is a financial modeling tool that examines how the values of a group of independent variables affect a single dependent variable under specified situations. Sensitivity analysis is applied in various domains, from biology and geography to economics and engineering. In the corporate world and economics, sensitivity analysis is employed, also known as a what-if study, often used by financial analysts and economists. It is particularly beneficial for studying and analyzing processes where the outcome is an opaque function of numerous inputs. An opaque function or process cannot be studied or analyzed. Climate models in geography, for example, are typically highly sophisticated. As a result, the precise relationship between the inputs and outputs is unknown. Under a given set of assumptions, sensitivity analysis evaluates how various elements of an independent variable affect a specific dependent variable. In other words, sensitivity analyses look at how various sources of uncertainty in a mathematical model affect the total uncertainty of the model. This strategy is applied within certain boundaries dependent on one or more input variables.

Financial analysts most typically use a Financial Sensitivity Analysis, also known as a What-If analysis or a What-If simulation exercise, to forecast the outcome of a given action when executed under certain conditions. Financial Sensitivity Analysis is conducted within specific parameters set by independent variables.

Advantages of Sensitivity Analysis

The use of sensitivity analysis has several advantages. It is vital to remember that sensitivity analysis employs a set of outcomes based on assumptions and variables, which are then assessed against historical data. As a result, a sensitivity analysis is a model with some room for error that may or may not be completely accurate, but it is a practical and extensively used technique. The following are the main advantages of employing sensitivity analysis:

Advantages of Sensitivity Analysis

Advantages of Sensitivity Analysis

Decision making

Sensitivity Analysis gives decision-makers diverse options to choose from to make better business judgments. Sensitivity analysis aids in making well-informed decisions. Decision-makers use the model to decide how responsive the output is to changes in certain factors. As a result, the analyst can help in drawing factual findings and making the best judgments possible.

Predictions

It thoroughly examines factors, resulting in more accurate forecasts and models.

Areas for improvement

Sensitivity Analysis aids decision-makers in deciding where future improvements should be made. The analyst can be more flexible with the boundaries within which to assess the sensitivities of the dependent variables to the independent variables using Financial Sensitivity Analysis.

Credibility

Financial models gain credibility through sensitivity analysis, which assesses them across various scenarios.

Processes in Sensitivity Analysis

Sensitivity Analysis is a business model that shows how input factors change affect target variables. What-if or simulation analysis is other terms for this model. It is a method of predicting a decision’s outcome based on variables. An analyst can assess the impact of a change in one variable on the outcome by constructing a collection of variables. When performing a sensitivity analysis, both the goal and input variables—also known as independent and dependent variables—are thoroughly examined. The analyst examines how the variables change and how the input variable influences the target. Each sensitivity analysis can be broken down into three steps:

Processes in Sensitivity Analysis

Processes in Sensitivity Analysis

Establishing a base case

The three most typical scenarios in sensitivity analysis and scenario planning are:

-The best-case scenario, or the most optimistic scenario with the most upside potential

-The worst-case scenario or the most pessimistic situation with the most significant risk of failure.

-The base case, or the most cautious scenario, results in the middle of the best and worst-case possibilities.

Analysts will decide which independent and dependent factors are most important to the outcome once a plausible base case scenario has been found.

Determining variable inputs

Cost of goods sold, debt finance, staff salary, client foot traffic, and other input variables are examples of input variables. Cash flows, internal rate of return, net present value (NPV), and net profits are examples of output variables. For example, net present value, which accounts for the time value of money, is often used to estimate if a project would be lucrative. Initial capital, the acceptable rate of return, and the return on investment from cash flows are all factors in NPV.

Testing the variables

Analysts do sensitivity analysis on the assumed independent variables after figuring out the inputs and outputs to thoroughly assess how sensitive their base case is to even the tiniest modifications.

Because it acts as a control, it is critical to use the base case as a frame of reference for the OAT analysis. Without a realistic base case scenario, there is no way to know how the best-case and worst-case possibilities will be affected. Multiple-input variables are more likely to change simultaneously or sequentially in the real world, often in dramatic and unpredictable ways.

Top Practices in Sensitivity Analysis

Layouts in Excel

For a successful sensitivity analysis in Excel, the layout, structure, and strategy are critical. If a model is poorly arranged, both the creator and the users will be perplexed, and the analysis will be prone to errors.

The following are the most critical considerations for Excel layout include putting all the assumptions in one place in the model, formatting all assumptions in a different font color to make them stand out, considering which assumptions to test – only the most critical ones carefully and creating a separate section for the analysis using grouping.

Direct vs. Indirect methods

Different numbers are substituted into a model’s assumption in the direct method. Instead of directly altering the value of an assumption, the indirect method inserts a % change into calculations in the model.

Tables, charts, and graphs

Even the most informed and technically sophisticated finance experts may find sensitivity analysis challenging to understand. Therefore, presenting the results in an easy-to-understand and follow format is critical.

Data tables are an excellent method to explain how changing up to two independent factors affects a dependent variable. The data table below illustrates changes in revenue growth and the EV/EBITDA multiple on a company’s stock price. Tornado charts are an excellent method to simultaneously display the impact of multiple variables. They are named Tornado Charts because they are arranged to make the chart look like a tornado cone, with the most impactful items at the top and the minor impactful items at the bottom.

Limitations in Performing Sensitivity Analysis

Excel is the most used tool for sensitivity analysis and creating financial models. Spreadsheets, on the other hand, leave a lot to be desired. They need much manual entry and leave little space for error. In a two-dimensional spreadsheet, creating a multidimensional analysis is also tricky. When stakeholders arrive with a fresh set of questions to be addressed, analysts must often go back to their drawing board and create new spreadsheets. These are significant to why intelligent firms should consider employing sensitivity analysis-specific financial modeling tools.

Magistral’s services on Sensitivity Analysis

Financial models have long been regarded as a reliable method of finding the contours of trade. Traditional financial models have been tweaked qualitatively due to a recent wave of acquisitions in which investors are into paying significant premiums for explosive growth or a high-impact technology. The sensitivity analysis provided by Magistral ensures the following:

-Analyzing the financial model’s unclear input values

-Predicting potential outcomes and planning for unanticipated risks

-Aiding the execution of risk assessment techniques

-Establishing co-relationships between the model’s multiple inputs and output.

-Execution of well-informed judgments

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is in Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

Investment banks utilize pitchbooks, which are sales books, to pitch potential clients as well as sell goods and services. It gives a general picture of the company, including historical information, financial strength, and services offered to potential customers. The sales crew of a company will utilize a pitchbook as a form of field guide to remember key benefits and to make clear crucial points. A pitch book should contain the crucial information required to persuade a potential investor, client, or business partner. Therefore, avoid using too many words and focus on the most critical things. Key topics covered in a typical pitch book include details on the investment highlights, significant financial data, the company’s core clients and customer base diversity, obstacles to entry for competitors, ability, and plan to meet future projections, future growth opportunities, management team strength, scalability of functions, prospects in the external market place, and known risks. The information provided in the pitchbook is used by an investment bank’s sales team to market its services to potential customers. Pitchbooks can be very helpful for companies, investment bankers, investors, and other stakeholders.

Types of Pitchbook

There are four different types of pitchbooks, which are explained below:

General Pitchbook

A general pitchbook offers a wide picture of the organization and includes significant details such as past profitable investments, present transactions, trends in the market, and profit metrics. Additionally, it includes details on the company such as its history, size, key executives, and global outreach.

It includes a client list broken down by various sectors, along with the relevant services offered to each client. Finally, the pitchbook might also include information on the firm’s rivals. It gives a general overview of the company’s top rivals, their performance, and the firm’s market position in relation to them.

Deal Pitchbook

For specific deals, a pitchbook is created that emphasizes how the investment business can offer services that satisfy the client’s financial demands. Graphs are used to display market rates, trends, and a description of the firm’s valuation. A list of prospective purchasers, financial institutions, purchases, and a brief summary is also included. A summary of advice and ideas for achieving the client’s objectives is also included in the deal pitchbook.

Management Presentation

After the business closes an agreement with a client, management presentations are used to pitch to possible investors. The presentation provides details on the client’s business, along with its investment requirements, financial metrics, and information on the project that needs to be financed. The client’s goods and services, a market analysis, a list of the company’s key personnel, a financial performance history, and potential future expansion are all examples of specific data.

Sell-Side M&A Pitchbook

A sell-side M&A pitchbook’s principal goal is to persuade the customer to choose the investment bank to conduct the transaction. It includes a list of prospective purchasers for the client’s business, an overview of the valuation, suggestions, information on the bank’s profitable transactions in the client’s sector, etc.

Challenges faced by companies in the creation of a Pitchbook

While creating the pitchbook, various challenges are faced by the companies as discussed below:

Streamlining, Structuring, and Customization

Often, companies face challenges in understanding their prospective clients/ customers, and hence collating, customizing, and structuring the Pitchbook is not efficient. Selecting the right data metrics and presenting them in a structured manner is quite an arduous task that is faced by the management throughout various stages.

Challenges faced by companies in the creation of a pitchbook

Challenges faced by companies in the creation of a Pitchbook

Time-consuming and Labour-intensive

For firms, it is a challenge, as it takes a lot of time to build and finalize the framework and create a pitchbook in tandem with all the requisite information. A business team working on a Pitchbook devotes its bandwidth to requirement gathering and other tasks related to Pitchbook, eventually losing focus on other priority tasks and core competencies, which can be detrimental to the organization’s growth.

Consistency and Upgradations

Continuously upgrading pitchbooks with respect to changing market scenarios/customer requirements is a must. The companies shall incorporate new ways and develop new methodologies to work and update pitchbooks regularly to better transpire and communicate the information to its stakeholders.

Managing various Stakeholders

Many people, including the managing director, vice president, associates, and analysts, are involved in the pitchbook preparation. To outperform the competition and persuade the client that they are the greatest in the market, the company must ensure that they are utilizing the most recent industry facts. The areas that require successful management include collaboration and coordination.

Understanding Client Requirements

An effective pitchbook must be able to focus on the important details while also meeting the client’s requirements. Understanding each aspect of a unique client and deciding what information to include and exclude presents a significant challenge for businesses.

Benefits of Pitchbook Support

Below are some of the major benefits of pitchbook support:

Focus on core competency 

Pitchbook assistance can allow businesses to focus on their core operations rather than devoting time to creating a Pitchbook in which they lack expertise. As a result, prioritizing the main job is critical.

Benefits of Pitchbook Support

Benefits of Pitchbook Support

Better Analysis and Structure

Pitchbook Support will better manage and coordinate various tasks while creating a Pitchbook. It will highlight the strengths, and showcase how the organization is different from its competitors in terms of experience, expertise, and modus operandi.

Cost and Expenditure control

You can convert fixed costs into variable prices with pitchbook support, meaning you only pay for the services you utilize. Consequently, adopting a support service can enable you to cut costs on a range of expenses, such as staffing, purchasing software, expertise, etc.

Better Branding and Messaging

Materials with inconsistent or poorly thought-out messaging could be detrimental to the brand’s reputation. Given the fierce competition in the market, having a brand and pitchbook approach that is compliance-focused is essential. Pitchbook support services help present your market position, strengths, and goodwill in a meaningful way.

Better Presentation 

Pitchbook support services can help to exercise brevity and incorporate various Charts, and graphs which makes the data metrics easy to understand. Moreover, it may also take up various cases to explain various elements to its prospective clients/customers.

Magistral’s Services on Pitchbook Support

By having a Pitchbook support service, an organization can save both time and costs, along with focusing on its core competencies. It can provide a platform where it can understand the needs and requirements and offer tailor-made support services as you deem appropriate. At Magistral, in addition to providing an extension to your employees to assist with your particular needs, we give the strategic knowledge you want to assess change. To provide the most effective and cutting-edge financial solution for every client requirement, we draw upon the multi-function knowledge base and experience of professionals in many market segments. Magistral can help in Pitchbook support in various ways such as:

Enhancing Service Requirements:

Provide tailor-made services as per the needs and requirements of the customer. Taking into consideration of various stakeholders and employing various recommendations provided by them.

Data Management:

Cleaning and filtering out the data and ensuring that significant information is showcased in tandem with the graphical representations. Employing various data metrics and collating information as per the client’s requirement

Compliance and Research Management:

By merging information from internal, external, and third parties, we have a strong knowledge of the opportunities and challenges facing your firm. Insights on markets, categories, competitors, and consumers that we have carefully chosen will help your commercial and marketing teams make better strategic decisions with respect to compliance requirements.

Analysis and Execution:

We have a dedicated team of experts for handling respective operations for creating a Pitchbook. Having exposure to diverse fields and expertise in handling various functions handling in an efficient manner.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction          

An Investor Profiling summarizes an investor’s financial goals, situation, time horizon, and risk tolerance. It can assist individuals in making appropriate investment decisions. How much risk one should be willing to assume is determined by an investor profile. For example, a more conservative portfolio may be suitable if someone needs to preserve their money and have a short time horizon. If someone wants to expand their monetary liquid asset (cash) and has a longer time horizon, a more aggressive equity-based portfolio may be appropriate. The most essential quality of an investor is temperament, not intellect quoted to Warren Buffett.

The first step in creating a wealth plan is to analyze the ability to take financial risks. Risk tolerance is determined by duties, objectives, personality, and various other factors. A risk profile is created to accurately understand an individual’s ability to assume financial risk as part of their investment portfolio. There are two crucial components of an investor’s profile:  risk appetite and risk tolerance. Risk tolerance is the amount of risk that a person’s finances can endure, whereas risk appetite is the amount of risk that a person is willing to take.

Importance of Investor Profiling

Risk Profiling is vital for an investor. Before investing in the market, one thing which usually troubles every investor is risk. People are concerned about losing their investment capital or receiving less than expected returns; nevertheless, the risk is generally a mathematical figure, such as volatility, that can directly impact your investment capital.

Each investor’s tolerance for market volatility will be different. This disparity is caused by various variables such as income, obligations, age, etc. The quantification of investor profiling is risk-carrying capability and capacity.

Investment decisions are made on the risk-reward trade-off that an investor is prepared to make in the face of precarious financial markets. It is critical to assess your financial position before making an investment. Take into account your financial goals, risk tolerance, and time horizon to help you determine the investments that are best for you.

Risk factors involved in Investor Profiling

The three major risk factors involved in investor profiling consist of Risk need, Risk-taking ability, and Behavioral loss tolerance.

Risk factors involved in Investor Profiling

Risk factors involved in Investor Profiling

Risk need

The amount of financial risk that someone, as an investor, can safely accept depends on their circumstances. An investor who may be short on funds during retirement and wants to sustain their monthly cash flow may need to take certain risks to achieve their end goal. As a result, risk requirement is about how much risk you “need to take” as an investor. This capability varies depending on their age and other things. For obvious reasons, the risk-taking capacity decreases as age increases. If someone has a target goal and can save according to that, then he will need an annual return. The rate of return will define how much risk one can need to achieve their target. During investor profiling, financial advisers must calculate realistic potential returns and market risk environment for all assets based on historical growth rates and the current market situation. Failure to accomplish a goal should motivate you to save more money or work for extended periods.

Risk-Taking ability

Risk Capacity refers to an investor’s ability to take risks given his existing and ongoing financial status. That is; his or her net worth in relation to liabilities, financial ambitions, and time horizon for investing. It has the potential to reduce exposure to growth assets. One such sub-factor is the investment horizon. For instance, if someone has five years to reach their objectives, one must invest in safer assets because growth assets have high short-term volatility. Risk capacity, or dealing with financial loss, might also influence risk-taking. In terms of liquidity, if the need for liquidity is low in the stage of capital accumulation, then the risk-taking ability is high and vice versa.

For example, if someone is receiving a pension or has a future income or assets to sustain, and their objective is not fulfilled, they have a higher risk-taking capacity than otherwise.

Behavioral Loss Tolerance

Behavioral Loss Tolerance defines an investor’s psychological capacity to cope with market swings. This covers the reactions and responses to various market conditions, such as a correction phase. Behavioral loss tolerance is measured by exams, interviews, and questionnaires and specifies the utmost uncertainty one can accept. The amount of awareness regarding items and their experience over market cycles is determined by financial knowledge and investor experience.

Higher ratings on these criteria imply that investors can progress to growth assets. Risk composure shows the likelihood of acting irrationally in response to a perceived crisis, leading to losses. A trigger-happy investor sells stocks at the first hint of a market drop, whereas the patient investor holds on.

A better investor profiling strategy is feasible when all three components are reconciled and linked together. The investor’s risk appetite cannot exceed the risk tolerance of the aim. Higher risk-taking capacity may be ignored when both the need and the behavioral loss tolerance are low. When risk-taking capacity and behavioral loss tolerance are Higher, a lesser risk needs may be dismissed.

Combining all of these factors yields a genuine risk profile, which should be used to establish a suitable asset allocation mix or strategy, which may require the assistance of a professional financial adviser.

Types of Investor Risk Profile

Conservative

The protection of capital is the main priority of the investor, and they are ready to take minimal risks in exchange for limited or poor profits. The possible asset allocation is equity of 0-10%.

Types of Investor Risk Profile

Types of Investor Risk Profile

Moderately conservative

The moderately conservative investors are ready to take on a little amount of risk in exchange for the possibility of long-term gains. The possible asset allocation is equity of 10 – 30%.

Moderate

Investors are willing to accept a moderate amount of risk in exchange for potentially larger long-term rewards. This type of risk profile is most secure for the investor. The possible asset allocation is equity of 40 – 60%.

Moderately aggressive

To maximize prospective profits over the medium to long term, investors are willing to take on a high level of risk. The probable asset allocation is equity of 70 – 90%. 

Aggressive

The investor is willing to take significant risks to maximize long-term prospective returns and is aware that a major portion of their cash may be lost. The possible asset allocation is equity of 90 – 100%.

Magistral’s Process for Investor Profiling

A risk profile indicates the level of risk that an individual is capable and willing to tolerate and accept. The risk profiling process usually starts with analyzing and discussing the investor’s circumstances and the goals the investments or portfolio should achieve.

Standard Process for Risk Profiling

Standard Process for Risk Profiling

Investors may have various purposes, they may never have thought about or stated their aims in this way before, and they may not be able to capture encapsulate in terms of quantity or time.

Magistral makes sure to entail and enumerate each and every detail related to the client’s needs, and risk considerations during the investor profiling. The process for investor profiling is as follows:

Define Goals

Here we understand what the goals of clients are, in both the short term and long term. Moreover, we also focus on the goals aligned with the current financial status. By having a broad picture, we can then pave the correct way in order to maneuver in the right direction.

Risk Profile Questionnaire

In order to understand the risk-bearing capacity and the willingness of the client to take risks, it is imperative to know the levels of risk exposure of the client. This is done by sending a “Risk profile Questionnaire” to the client. After, filling it out, our team of experts analyzes the questionnaire in order to ascertain the optimum risk exposure of the client.

Scoring the Questionnaire

By having the requisite filter channels, within each category of questions and taking into consideration of various factors, we score each level of questions in tandem with the client’s requirements.

Analyzing and Examining

Careful Scrutiny and analysis of the answers with respective weightage to the client’s needs. We make sure to understand the various needs of the client needs in order to make an optimum risk profile.

Summary Close

Careful Scrutiny and analysis of the answers with respective weightage to the client’s needs. We make sure to understand. While onboarding the client we also deliver a summary of the procedure and the rules of engagement with clients.

Conclusion

Investor profiling is required for determining the optimal investment asset allocation for a portfolio. Because risk appetite is influenced by psychological characteristics, loss-bearing ability, investor age, income and costs, and other factors, each person has a unique risk profile.

Magistral consulting can help you complete a quick risk assessment to determine which risk group you belong to. We can perform the entire investor profiling process and then use this information to determine what percentage of your portfolio should be invested in which asset class.

Why Magistral consulting?

-We provide an exhaustive investor database which is helpful in finding the right kind of investor and beneficial in filtering out the information in concurrence with the existing market scenario and also providing tailor-made support in tandem with client requirements.

-Magistral consulting ensures analyst support at every step of Investor profiling. We have a dedicated team of experts for handling respective operations. In accordance to the client’s demands and specifications, we offer customized services. Considering various stakeholders’ concerns and implementing their diverse proposals.

-We provide a service of target company profiling. It is crucial for us to meet the specific  expectations of our customers by recognizing their requirements.

-It also provides Marketing and Communication support. We have a proficient team having experience in a variety of sectors and indeed the ability to handle different tasks effectively. We make sure to understand each and every client’s needs in a comprehensive manner and provide tailor-made services in an efficient manner.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

Before committing funds to private markets, due diligence for private equity outlines a potential investor’s procedure for evaluating an investment fund’s appeal, value, financial sustainability, and prospects. It is often performed by analysts and such specialists and includes gathering and processing information about a fund’s historical investment record, finances, and other aspects. A limited partnership’s decision to contribute capital to a fund is based on the findings of the due diligence process. Institutional investors often use sophisticated due diligence methods for all their public or private transactions, but due diligence in the private market presents different obstacles.

Challenges faced in Due Diligence for Private Equity

Although all due diligence processes have basic features, due diligence for private equity processes has obstacles which are explained below:

Challenges faced in Due Diligence for Private Equity

Challenges faced in Due Diligence for Private Equity

Private Data

Because the target firm is not publicly traded, there is little information about it available than otherwise, such as through its SEC filings. The businesses that fund managers usually prefer to invest in are not publicly traded, making it difficult to get all the information a transaction team wants to feel confident.

Third-party data scrapers

Third-party providers providing private market data have now been considered to help with Due diligence for private equity funds. On the other hand, some data sources are more dependable and valuable than others. Some companies offer financial performance statistics scraped from publicly available information, often confined to a summary. Furthermore, some data sets could be too tiny for investors to trust their accuracy. Investors should seek primary-sourced data from a third-party private equity data provider rather than from pitch books or elsewhere online when evaluating a third-party data provider.

A lengthy process

It is frequently both a manual and time-consuming procedure. Investors are increasingly turning to technology to speed up and streamline their due diligence procedures, ensuring that the best decision is made.

Different Strategy

As many private transactions seem to be financial instead of strategic — i.e., the private equity firm’s sole motivation is to profit from the transaction – the unique perspective. In this case, a private equity deal team may devote more time to the financial components of the transaction than to the managerial or commercial parts, requiring far more information about the company’s financial status.

Confidential Information Memorandum (CIM)

The company’s confidential information memorandum (CIM), a vast document that includes financial data, a description of the management team, and commercial specifics such as insights into the customer base, products, and competitors, is often used to drive due diligence for private equity. On the other hand, Smart private equity firms do not rely only on the CIM and double-check the data.

The Steps involved in the Process of Due Diligence for Private Equity

Various steps are included in the process of due diligence, these include the following:

Steps involved in the Process of Due Diligence for Private Equity

Steps involved in the Process of Due Diligence for Private Equity

Industry Due Diligence for Private Equity

The first aspect of due diligence for private equity is a detailed investigation of the target company’s sector. Understanding an industry takes time and based on how in-depth the private equity purchaser wants to go, the process may involve accounting, tax, and legal advisers analyzing the nuances of the business. During their sector investigation, private equity buyers may discover other intriguing target companies or decide that a related industry is better suited to their investment criteria.

Due diligence in the target company’s industry is a transaction-specific exercise tailored to the private equity investor’s requirements. Knowing the industry in which the target company operates, its competitors, and market trends are all part of the exercise. In such an exercise, the investor considers if the specific target industry is growing and how profitable an investment in that sector will be.

Quality of Earnings Assessment 

Although the financial portion of due diligence for private equity examines the same papers as any other due diligence procedure, it emphasizes the ‘quality of earnings.’ Separating extraordinary revenues and expenses from past income statements examines what the target company can earn on an ongoing basis.

By removing these remarkable factors from the financial figures, the private equity client should get a more realistic picture of how the company is expanding and how it is expected to continue. The ‘quality of earnings’ analysis can be as in-depth as the private equity buyer requires. It could, for example, include a worst-case scenario in which several of the target firm’s top clients cancel ongoing contracts and analyze the impact on the target company.

Legal Due Diligence for Private Equity

The deal team must be confident about proceeding before the firm invests time and money in legal due diligence for private equity.

Legal due diligence examines the legal ramifications of the transaction, in part to confirm the firm’s assumptions, validate that the firm is not exposed to unanticipated liabilities, and ensure that the firm is in compliance with all laws and regulations.

Legal due diligence for private equity deals should focus on the following areas:

  • The legal ramifications of a change of power at the target firm.
  • Regulatory constraints of the target company.
  • Agreements for exclusive supply or purchase.
  • Contractual agreements with current vendors, suppliers, and customers and how the transaction affects them.

Operational Due Diligence for Private Equity

Any private equity transaction aims to improve the target company’s operations and rise in value before leaving the investment after a set period. As a result, the deal team will work with financial and legal experts to identify all the prospects for value-generating operational changes at the target firm. Due diligence is learning about a manager’s internal processes to safeguard investors from losses caused by operational errors or, in the worst-case situation, fraud. With limited money and time, this can be not easy. On the other hand, Minor infractions might fuel larger ones and build a culture in which practices or norms are increasingly considered toothless guidelines. Investors can choose fund managers measured based on and clear idea of the necessary operational risks, improving the quality of their portfolios and avoiding potential reputational risk and economic loss.

Future of Due Diligence for Private Equity

Asset competition has been intense, and it is expected to continue. More investors are vying for a smaller pool of assets, and potential targets’ management teams are less capable or willing to devote time and resources to responding to diligence demands. As a result, due diligence for private equity companies is growing more complex as they increasingly analyze more data and look for ways to make purchases more efficient.

-Due to market conditions, private equity firms have had to reconcile risk mitigation and wealth development.

-More technology and analytics will be used, and more sell-side investigation.

Firms can do the following to fulfill the intention of making the diligence process much more efficient and digital:

-Utilize data and analytics technologies to generate quicker, more actionable insights by embracing digital diligence.

-Integrate sell-side diligence into their procedures the proper way.

-To the degree that it can underwrite investments, focus on value generation.

-Improve ESG diligence by collecting and analyzing data more consistently.

Magistral’s Services on Due Diligence for Private Equity

Magistral Consulting’s due diligence for private equity services ensures that an asset generates healthy returns. The services include:

Industry Research

With the acquisition target in mind, the target industry is examined for potential headwinds and tailwinds and short- and medium-term security and returns.

Due Diligence

A detailed corporate profile is created utilizing primary and secondary research to detect any risks.

Due Diligence Questionnaire

This service involves the preparation of due diligence questionnaire leading to further analysis with targets and investors.

Primary Research

Exploratory interviews with all stakeholders at the Target Company, including management, employees, ex-employees, vendors, and investors, are done to uncover any future liabilities.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is in Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

Investment Banking is a special type of banking that helps organizations or individuals raise capital and provides consulting services to them. It helps in conducting large complicated transactions such as mergers or acquisitions or raising an initial public offering (IPO) using underwriting.

Investment Bankers are experts in the field of finance who have their fingers on the pulse of the market. As acknowledged worldwide this is one of the most complex financial mechanisms in the world.

As has been the case with different sectors, it has been for some time now that organizations have started investment banking outsourcing services to third-party vendors as well. Outsourcing one means giving the authority to outsource one of its services to these third-party vendors so that the company can save on operating costs and get specialized services from highly skilled staff- all this while ensuring adequate data security and adherence to regulatory compliances.

This helps organizations not only streamline their services but also provide value-added services to customers that they couldn’t have thought about earlier.

It is important to note that the nature of investment banking outsourcing and the services provided by vendors have evolved alongside technological advancements. The first and foremost is business digitization, which has resulted in increased transparency and visibility for clients, as well as a better end-user experience for customers. This has resulted in improved strategic partnerships and, as a result, higher quality work being outsourced by investment banking outsourcing clients, which can only be met with strategic partners.

Challenges Faced by Investment Banks

Modern investment banking faces various kinds of challenges that are listed below:

Challenges Faced By Investment Banks

Challenges Faced By Investment Banks

Scarce Capital Resources

Due to recession and depression all over the world, almost all markets, companies, and individuals are not comfortable investing their money in the capital markets. This has created a world where capital resources have become scarce. The job of an investment banker is to invest capital more efficiently, but due to the scarcity of resources, there is a reduced business for investment banks in general.

Need to Reduce Costs

Markets have become more competitive. As a result, the cost of goods and services is decreasing. This has an impact on the finance industry as well. Investment banks’ margins are shrinking, and thus their cost of capital is decreasing. As a result, they must reduce costs to encourage their investors to invest money.

Increased Regulations

The new structured products created and sold by investment banks go through strict regulations since the mortgage crisis in 2008. This creates a limit on the operations of investment banks. These increases cost for investment banks and they have to maintain a different department of qualified professionals so that they could create and bring in new investment opportunities after scrutinizing them.

Technology Disruptions

Rapid technological advancements have drastically altered every industry in the world, including investment banking. The fintech industry has emerged over the years as new technology. This industry revolves around providing the same financial services at a lower cost. They have access to cutting-edge technology and a modern network, allowing them to raise capital at a lower cost.

Cross Selling Complexities

A huge area of the investment banking services sector relies on cross-selling. For example, if someone is looking for mergers and acquisitions, the investment bankers provide them with the services such as issue management, capital structure advisory, and many more. This way they bring value to their clients. But due to limited budgets, they are limited to the services they offer. The declining budget causes decreased revenue for research and other departments.

Benefits of Investment Banking Outsourcing

There are several reasons why investment banking outsourcing is becoming increasingly popular. We have tried to highlight some of these reasons below. They are:

Benefits of Investment Banking

Benefits of Investment Banking

Focus on Core Business

Investment banking outsourcing can help companies in focusing on their core competencies rather than focusing on mundane tasks and being worried about their day-to-day operations.

Controlled Costs

Cutting operational costs is a challenge that exists with organizations throughout. Investment banking outsourcing provides an avenue where companies can take care of differences in the relative value of currencies to derive as much as 30-50% savings in costs.

Increased Efficiency

Investment banking outsourcing is a specialized operation and the workers who work for these banks need to be highly skilled for this. A similar talent of MBA’s exists in low-cost destinations like India where the operations can be outsourced to them. Highly skilled talent helps in improving the efficiency of investment banking services.

Changing Economic Factors

In today’s uncertain world, the political dynamics are changing daily. This has an impact on the economies of the world and since we are so intertwined today the ripple effects of adverse conditions in a globally connected country are bound to have effects on the whole world. Investment banking outsourcing ensures the risks are well hedged with specialized partners operating from different geographies across the world.

Technological Changes

Investment banking outsourcing has ensured that the companies are up to date with the latest technological advancements that are occurring worldwide at a fraction of the cost had they invested real-time into adopting them. The use of the latest technologies by third parties ensures that all the technological challenges are met.

Time Zone Advantage

The gap in time zones between your country and the area you are outsourcing to, in addition to the cost advantage, is another important benefit. By doing so, you can focus on your primary tasks all day long while also having finished your day-to-day operations by the time you get up the next day. It gives you the benefit of round-the-clock business operations.

Magistral’s Services on Investment Banking Outsourcing

The outsourcing of investment banking may be a way to cut operating expenses. In an era of growing complexity in both established and new industries, investment banks are extremely nuanced. Smaller investment banks have a difficult time juggling their project pipelines and manpower needs. Medium-sized banks are eager to develop their expertise in emerging industries, which are bustling with activity and volume. However, large banks are more concerned with cutting costs while maintaining the quality of the services they provide to their customers. Magistral provides a range of service options to support Investment Banks.

Some of the services that are associated with Investment Banking Outsourcing that is offered by Magistral consulting are:

-Deal Sourcing: Performing industry and market analysis, finding potential targets, and publishing newsletters are various kinds of services provided under deal sourcing.

-Data Cleansing: Data cleansing and mining are done to perform analysis on suitable data.

-Valuations: Valuations are done by creating financial models by various methods such as LBO/DCF Modelling, Comparable Analysis, Precedent Transaction Analysis, and Impact Analysis.

-Due Diligence:  Research-based due diligence both primary and secondary are performed to uncover the true potential of an asset while giving a completely independent opinion on investment quality.

-Deal Execution: Teasers and Investment Memorandums are made along with identifying the potential investors/buyers.

-Portfolio Management: Providing ESG compliance monitoring, preparing financial reports, business development support, and procurement support is provided.

-Equity Research and Analysis: The services provided under this head include fundamental analysis, quantitative analysis, credit analysis, and country analysis.

-Marketing: This includes creating white papers, case studies, thought papers, CRM management, etc.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

What is an Outsourced CFO?

In today’s outsourced and globally connected business world there are many functions of businesses that are being outsourced like accounting, payroll, operations, IT, and marketing among others. Unfortunately, not many companies are aware that finance as a function can be outsourced too.

Herein, comes the importance of an Outsourced CFO. An outsourced CFO is a financial expert who provides financial services on a part-time or full-time basis to companies. The role of an outsourced CFO is to provide strategic insights as well as provide expertise in areas such as formulating strategy or providing core financial services help. This includes areas such as support in finding cash flows, raising capital, implementing more efficient systems, or formulating growth strategies. Usually, outsourced CFOs have considerable experience performing high-level financial roles as they may have worked in corporate finance roles in other reputed organizations.

Why one should hire an Outsourced CFO?

Outsourced CFOs can lead up to 40-50% savings in costs. About 80% of financial services executives outsource or offshore some of their services.   Highlighted below are some of the top reasons for outsourcing this critical finance function.

Benefits of Outsourced CFO

Benefits of Outsourced CFO

-Currently undergoing growth – This is usually the case for companies that are witnessing a lot of growth. A common example could be growth related to the launch of new products or say when a company is entering a new market.

-Resolving key business challenges – This comes into the picture when a company for instance is trying to resolve challenges such as cash flow, cost cutting, or looking to improve operational efficiencies.

-Raising debt or equity capital – Outsourced CFO can be of great help especially when companies are looking to raise capital. They do so by assisting in strategy formulation for it, due diligence, and in raising capital in terms of debt or equity mix.

-Maximizing margins – By analyzing current spending and costs, the outsourced CFO can suggest improvements that can be made in spending.

-Need for an interim CFO – This normally is the case when there is a need felt to place an interim CFO, especially in cases where an organization is transitioning from one CFO to another or a need is felt to outsource an organization’s finance function simply because someone else can do it better.

-Taking advantage of consulting services- An organization can look to hire an outsourced CFO simply because they can do the task better.

How does an Outsourced CFO provide value?

We have already seen why companies should look forward to outsourcing their services to a third-party service provider. In this section, we will look at some of the key benefits that are provided by an outsourced CFO. It must also be mentioned here that there are cost implications associated with hiring a CFO. Smaller companies may not have the budget to hire a CFO. This means they can incur a lot of savings by outsourcing this function which can be at a fraction of the costs of the salaries that are paid to a CFO. Not to mention the availability of talent and global access to them without incurring many operational headaches. These talents are simply at a third company party’s disposal the benefit of which can be reaped by companies.

There are some of the other benefits which an outsourced CFO can provide. Some of them are:

-They help in financial planning and analysis by providing assistance in the form of budgeting, and forecasting future revenue or cash flows for a company.

-They can help an organization in assessing its strengths and weaknesses vis a vis competition.

-Help in designing complex business models which necessitate the use of techniques such as NPV and IRR.

-Help in analyzing spending and cost incurred by a company and thereby suggest improvements in cost cutdowns.

-Assistance with financial statement preparation.

-Assistance with yearly financial reporting.

Top 10 Outsourced CFO services

A question that arises naturally is what kind of services are provided by Outsourced CFO.

Listed below are the top 10 services

Top Outsourced CFO Services

Top Outsourced CFO Services

-Financial Strategy – One of the key benefits of outsourcing CFO services is in designing a company’s financial strategy. These are designed both short term as well as long term.

-Forecasting – Forecasting for the future is one of the key functions of any finance division of an organization. Preparation of the details helps in planning an operational roadmap for an organization. It requires a strategic understanding of requirements, assessing current and future capabilities of a company, competition analysis, and mastery in building financial models

-Financial systems strategy and design – With growth, it becomes imperative for any organization to implement software and improve process that can match an organization’s growth strategy. An outsourced CFO can help address this pain point by redesigning systems and suggesting improvements in current processes.

-Budgeting – Managing budgets is one of the key functions of the finance function. Normally budgeting is done for a 5–10-year time horizon. Budgeting helps to plan spending and future revenues in great detail.

-Financial statement preparation – An outsourced CFO can help in preparing financial statements as well as interpreting their consequences. This is the most useful information for any organization.

-Raising capital – Here a person is introduced to a host of investors, people or organizations who can help a company in raising its capital.

-Capital structure – This is done by suggesting which would be a better route – debt or equity or a mix of both.

-Interim CFO services – This service is most useful to avail of in case there is a transition from one CFO to the next or in cases where low-cost outsourcing seems to be a better option.

-Cost cutting – Costs are an important factor in decision-making. Outsourcing its services to a third party can help in this.

-Complex decision making – This is especially true with companies where complex decision making is involved and which requires the knowledge and expertise of a person. Examples could be making models for Mergers and Acquisitions, management buyouts, etc.

How can Magistral help in providing CFO services?

Magistral offers Portfolio Management services for varied kinds of the portfolio of companies such as Private Equity or a Venture Capital fund. For all the investors who sit on multiple boards, it is a headache, to implement something in a company that worked in another portfolio company. The problem is more acute when all companies are in similar industries and are facing quite similar headwinds. Limited supervision time available to board members, unavailability of resources across companies, and implementation knowledge held in a single portfolio company, all play spoilsport. It’s like re-inventing the wheel every time for the same problem.

We help portfolio managers in centralizing their Marketing (mostly digital), Strategy (Fund-raising and Exits), and Finance at fraction of the cost required to have dedicated functions in each portfolio company, big or small. The off-shored extended team also ensures no knowledge is lost for similar projects across companies and multiple projects in multiple companies can run at the same time, prioritized as per the schedule of board meetings. Learning, of course, is cross-pollinated across projects.

Our service offerings for portfolio and other companies are:

-Strategy: Identifying add-on acquisitions and potential buyers, fundraising, exit strategy, growth strategy, and content marketing

-Analytics: Financial reporting and analysis, preparing dashboards, data visualization, text cleaning and mining, predictive modeling, KPI tracking, and web scraping

-Sales: List generation, CRM cleansing and management, competitive intelligence, and social media management.

-Financial planning: Budget preparation, forecasting, and competitive quarterly earnings updating.

-Procurement: Spend analysis, vendor identification and management, spend base cost reduction, category strategy, RFP support and procurement strategy.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is in Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

An investment memorandum is a legal document that outlines a private placement investment’s goals, risks, and terms. Financial statements, management biographies, a full explanation of the business activities, and other information are included in this document.

The purpose of an investment memorandum is to inform purchasers about the offering and protect sellers from the risks of selling unregistered securities. It is a document sent to potential investors. It is an essential business plan that skilled investors may use to do due diligence. These documents are mostly a formality employed to satisfy securities authorities’ obligations, as most intelligent investors conduct substantial due diligence. However, offering memorandums is comparable to prospectuses—private placements rather than public offerings.

An offering memorandum, also known as an investment memorandum, is often prepared by an investment banker to explain a company’s capital requirements to potential investors. The banker utilizes the memorandum to hold an auction among a select group of investors to find the best deal.

Private equity firms sometimes seek to accelerate their growth without taking on debt or going public. If a manufacturing corporation, for example, wants to grow the number of facilities it owns, it can use an offering memorandum to fund the expansion. When this occurs, the company must first select how much money it wants to raise and at what price per share it will do so. In this case, the firm needs $100 million to fund its expansion for a $60 cost per share.

Importance of Investment Memorandum

An investor memorandum is significant since it explains if the company is a good or terrible investment. The memorandum serves as a business overview or a revised business strategy.

It allows a company to demonstrate its strengths and why it is a good investment.  Its significance extends beyond the fact that it is a required document in the investment process for sellers and investors. The document protocol aids the investor in comprehending the investment’s prospects, potential dangers, prospective returns, activities involved, and overall capital structure.

The offering memorandum protects the investor and the issuers of securities. The issuer must adhere to all SEC requirements to the letter (Securities and Exchange Commission). The Securities and Exchange Commission (SEC) promotes investor fairness by protecting investors in the securities sector from false information and assisting investors in making educated decisions when investing large sums of money.

The offering memorandum also gives the vendor a professional appearance. Investors will not put their money into companies that do not appear to be well-organized or experienced in their field. Memos are a simple approach for stakeholders to generate opinions about a concept. This is especially true when discussing a memo with possible investors, but it also applies when utilizing a memo to make a product or strategy choice. If an investment memorandum is well-designed and complete, it may be an indirect marketing tool.

What is included in the Investment Memorandum?

Investor memorandums usually provide information on the company’s structure, financial risk and health, and other pertinent information. This information aids an investor in determining if the risk is acceptable in exchange for the business’s prospective profits. A typical memorandum has the following items:

Outline of Investment Memorandum

Outline of Investment Memorandum

Introduction

The initial pages of the offering document include a brief description of the firm, its principal operation, and all “legends” needed by federal and state securities regulations.

Summary of the Terms of the Offer

The firm’s capitalization –before and after the offering – should be included in this part, which is usually the form of a term sheet. Liquidation preferences, conversion rights, anti-dilution clauses, voting rights, and other investor protection provisions may also be incorporated.

Factors at Risk

A PPM will list any risk factors that the issuer can think of that might affect the investor’s investment, including both generic risks that apply to comparable investments and risks specific to the issuer and its securities Concerns might include, for example, reliance on a strategic relationship, reliance on a limited number of individuals, or competitive risks.

Description of the Company and Management

This part offers the company’s history and discusses its goods and services, the industry, goals, competitors, advertising and marketing strategy, suppliers, intellectual property, client descriptions, and other essential information the investor could find helpful. Biographical information, specific abilities, and additional background information will be included in management information.

Use of Proceeds

A corporation must explain how it intends to use the net funds generated from the offering and the estimated amount anticipated for each purpose. This allows the investor to see how their money, as well as that of others, is being invested is used

Securities Description

The rights, limits, and class of securities being sold are described in this section. It should also indicate the company’s ability to adjust its capitalization through multiple shares and dividend distribution types.

Exhibits

Exhibits allow a business to present additional information and documents that may be relevant to an investor’s choice. Copies of investment contracts, financial statements, the issuer’s organizational documents, essential agreements, licenses, and other documents may be included as exhibits.

Tips for Writing a Perfect Investment Memorandum

An investment memorandum can be prepared while keeping in mind some points like making it simple, preparing a layout, mentioning transparency about risk, including the investment’s terms, etc, these are further discussed below:

Writing tips for Investment Memorandum

Writing tips for Investment Memorandum

Make it simple to comprehend

Clarity is essential. It’s critical to take your time and speak in a manner investors can comprehend. Their primary objective is to grasp the possibility and develop a business plan. If you use jargon in your investment memoranda, you risk attracting the wrong attention. Keep things simple; don’t throw folks off by making things too complicated.

Optimize the layout

Include a summary of the firm and the market. An overview of your products and services, competitive analysis, your target audience, and your financial model should be included. Use graphs and charts to concisely communicate essential information while making your investment memorandum. More aesthetically appealing. This is very beneficial when dealing with financial data. Using a bar chart to share sales growth, for example, emphasizes how quickly you’ve expanded and is simpler to read than a standard table.

Be transparent and upfront about the risk

Nobody enjoys being surprised. As a result, rather than the fund discovering risks during due diligence, set them out in your investment memorandum early on.

Include the investment’s terms

Outlining the financial project’s goals is an intelligent thing to undertake. Determine if the funds will be utilized for expansion, acquisitions, or working capital.

Make sure your financials are in order

This is the most crucial aspect since it is the key to receiving high-level term sheet offers. You must supply a complete financial statement that contains the following information:

-Gross revenue

-Flows of funds

-Revenue

-Profit and Loss Statements

-EBITDA

-Margins

Use statistics from the previous two years and an estimate for the following five. This allows potential investors to run their numbers and see if you’re a reasonable risk. Be as specific as possible.

Why Magistral Consulting?

Magistral consulting prepared a Private Placement Memorandum for a large land parcel amid a mega-global city and successfully analyzed cash flows and returns from all scenarios. It also used to raise over 40 million USD worth of co-investments.

Investment Memorandums

Magistral consulting provides investment memorandum services for Funds, Properties, Farms, Luxury Hotels, Land Banks, Islands, Resorts, etc.

Analysis of Valuation

Using techniques such as comps, precedent transaction research, and leveraged buyout to determine the company’s fair market value.

Primary Research

Exploratory interviews with all stakeholders at Target Company, including management, workers, ex-employees, vendors, and investors, to identify any red signals.

Company Profile Data

To ensure that the memo is completed in its completeness, we gather all the company-specific data and all the questions that may be asked.

Detailed Financial Analysis

We provide a complete financial review utilizing all essential characteristics from balance sheets to income statements.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is in Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

When a bank or financial lender outsources the working of its mortgage files, this is known as business process outsourcing. Some banks and lenders employ in-house loan originators, loan officers, underwriters, and closers. The process is outsourced to third-party organizations by banks and mortgage lenders who do not have these workers on staff. This is called Mortgage Lending Process Outsourcing.

Mortgage Lending Process Outsourcing can be a very cost-effective technique for originating and processing mortgages, which is one of the reasons why a lender would use it. Because the mortgage company would not have to house all these people, it can save money on rent and other operating costs associated with keeping an office or commercial space. The mortgage lender can also save money on salaries and worker’s compensation by outsourcing instead of hiring full-time staff. This method allows the mortgage lender to pay specialists while working on mortgage files while also employed in overflow situations for mortgage lenders, banks, and mortgage businesses.

Banks and lenders often turn to Mortgage Lending Process Outsourcing to manage the problem rather than hiring more people to cover peak periods and then laying them off after business slows. Employees of these firms do the same tasks as those of a mortgage lender’s in-house staff. Typically, these individuals run a business out of their own home office, or a place owned by another company. When a client applies for a mortgage, the bank sends the file to an outsourced loan officer. When the loan officer has finished working on the file, they pass it on to the mortgage lender’s outsourced underwriter. The procedure will be repeated until the mortgage file is closed. The sole distinction between Mortgage Lending Process Outsourcing and in-house processing is the location of the file’s professionals. They are not personnel of the lender in this circumstance.

Benefits of Mortgage Lending Process Outsourcing for SMEs

Despite the monetary crisis, mortgage process outsourcing has aided innumerable mortgage brokers, banks, and lenders in dealing with new generation customers and their diverse expectations. The following are the few primary benefits of outsourcing mortgage services:

Mortgage Lending Process Outsourcing Benefits

Benefits of Mortgage Lending Process Outsourcing

Reduced Turnaround Time

Lenders are compelled by market demand to change their product portfolios often. A mortgage is initiated in numerous steps, with the borrower having the possibility to back out. While outsourcing does not entirely remove this danger, it does speed up the decision-making process and reduces the chances of a borrower withdrawing from a loan application.

Targets may be conducted while lowering turnaround time by incorporating the ability and potential of an experienced team that provides a streamlined process by offering high accuracy and enhanced efficiency.

Focus on Core Competency

One of the significant advantages of outsourcing mortgage processing is that the service provider’s highly qualified team can do complex mortgage-related activities, allowing the company to focus on critical goals while managing the extra work. The service provider can conveniently oversee many mortgage activities, increasing profitability and growth. It also aids in the re-allocation of internal resources for a more effective workflow.

Access to Big Data Analytics

Big data is nowadays a must-have resource for any business. Several financial institutions are increasingly actively using big data analytics to serve their consumers better. However, processing copious amounts of data is costly, and not all small firms or institutions can afford the necessary technology and skills. Outsourcing allows full use of big data and makes analytics-driven loan and pricing model decisions, leading to a considerable rise in profits and increased consumer satisfaction.

Minimal Overhead Costs

Financial institutions that work their loan processing departments find the technique expensive and time-consuming. They must recruit and train a workforce, pay significant salaries and benefits, and obtain the necessary equipment.

Most mortgage outsourcing service providers, on the other hand, either charge fair prices or change their fees based on their needs. The outsourced crew has previously been trained and has experience in mortgage loan processing outsourcing. Infrastructure and staffing costs are significantly reduced because of this.

Ensuring Information Security

Outsourcing can also help financial organizations, particularly smaller ones, in information security. Smaller businesses often struggle to manage their information security effectively because it needs significant expenses. As part of their obligation and commitment to the client, the outsourcing partner provides information security.

Streamlined Process

Loan processors who are outsourced are highly competent experts. Financial institutions and lenders receive help from their holistic support in originating and funding loans and promoting stability and security as streamlined and simplified as clients. Business functions are becoming more efficient because of digitalization. On the other hand, building a digital infrastructure needs significant money and resources. Most outsourcing partners offer innovative technical knowledge and a digitalized framework that mortgage lenders could use.

Mortgage Lending Process Outsourcing Services

 

Mortgage Lending Process Outsourcing Services

Mortgage Lending Process Outsourcing Services

Diligent Mortgage Underwriting Support

Many lenders experience issues with their underwriting process, such as missing or insufficient information and poor underwriting productivity. Inefficiencies in the underwriting step can result in significant problems such as mistaken asset and income estimations, poor loan quality, and excellent denial rates. It can also result in a never-ending backlog of underwriting work.

Streamlined Mortgage Closing and Post-Closing Support

There are numerous inefficiencies in the loan origination process. These can have several negative consequences for a firm, including reworks, longer turnaround times, and a worse borrower experience overall. Lenders can automate their entire closing process by outsourcing their mortgage services. Automation can also help them standardize their procedures by reducing the number of submission checklists needed. These businesses may also design extensive process maps and do thorough quality assurance inspections.

Meticulous Title Support Services

The title to the property heavily influences the ultimate closure of a loan. Many factors like whether the title was claimed before or if there are any unsolved concerns must be checked. Title support services, such as title order, title inspection, title commitment, and final policy creation are provided by mortgage outsourcing businesses. They also include services such as title insurance, settlement, and closure.

Intelligent Appraisal Support Services

Lenders and mortgage brokers can use third-party help for complete appraisal support services as part of their mortgage outsourcing services. Thanks to intelligent analytics and innovative valuation technologies, mortgage outsourcing firms can deliver rapid and correct property assessment services.

Proactive Loss Mitigation Services

No one wants to lose money on a poor loan. From basic document processing to complicated operations like borrower outreach, mortgage process outsourcing services offer various loss mitigation services. Foreclosure aid, custom loan modification, short sale management, and other services are available.

Smart Mortgage Automation

Manual back-office activities and assistance are not the only things that can be outsourced in the mortgage industry. Mortgage outsourcing services also form the most up-to-date software and automated solutions for mortgages. Due to recent technological breakthroughs, various laborious operations, such as data extraction and validation have been automated. For example, automating mortgage loan origination choices can drastically cut turnaround times and increase client satisfaction. Mortgage underwriting automation can be done to collect data directly from the source. This type of intelligent automation can save a lot of time and money that would otherwise be spent on human data entry. Automating the collection of required consumer papers such as credit check reports and income statements from credit reporting bureaus can also help.

Magistral’s services on Mortgage Lending Process Outsourcing

We have created unique procedures for spanning loan origination, underwriting, closing support, and title support services with mortgage clients. We provide data encrypted services, including document fulfillment, originations support, underwriting support, appraisal, and loss mitigation services. These are explained below:

Creation of leads

In this leads are created for loan origination where key data from loan application is summarized, credit is processed and scored, rate quotes are locked and indexation of loan document is done.

Processing and Underwriting

Providing underwriting support, clearing loan conditions, conducting quality checks and auditing frauds if any, creating policy and compliance audits, verifying social security numbers, and disclosing all the information to the client are major steps under this.

Closing and Funding

After all the necessary information is communicated to the client, the policy documents are created by preparing the closing documents and assuring the quality check and file audits.

Servicing

This step includes the servicing part like loan boarding, auditing the new loans, pay-off processing, customer research, and resolutions, and finally, welcome calls are conducted for the mortgage client.

Why choose Magistral for Mortgage lending Process Outsourcing?

Magistral’s mortgage services help businesses develop robust operations, make better decisions, reduce risk, and unlock growth. For a smooth transfer, Magistral uses a unique and low-risk procedure. Business continuity and risk minimization are at the forefront of the process. The procedure is also intended to instill trust in the clients in Magistral’s ability.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is in Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

 

Introduction to Investors Database

An investors database is the list of persons who engage in investment activity and is used to create targeted marketing campaigns. Investors databases are created by various sources and are usually highly guarded due to their potential value.

People who want to access an investors database must pay a fee charged per entry. Rather than searching through the entire database, they can search by precise parameters, such as seeking investors in particular demographic groupings. The information that is available through a database of investors varies. Names and contact information, and information about investing history are supplied to generate a picture of the kind of assets that persons on the list are interested in accessing. Race, marital status, earnings, and other criteria can all be collected using databases. This data is obtained through surveys and other methods and can be used in several marketing efforts.
People looking for investors can use an investors database to create a target market and advertise to generate initial interest and get a venture off the ground. People looking for a particular type of investor, such as a philanthropist looking to invest in charitable causes, can use specialty products such as databases with high-net-worth investors. A list of investors who meet the search parameters will be provided, and the person could contact those investors as needed. Access to an investor database with complete access to all listed investors is possible, but it is usually costly. People usually need statistics programs and other tools to process all the database entries because viewing all the relevant information at once could be overwhelming. Because the original database proprietor does not want the product to lose value, individuals with complete access are often prohibited from reselling the data they buy.

Features of Magistral’s Investors Database

 

 

Magistral's Investors Database Features

Magistral’s Investors Database Features

Updated Data

Updating new quantitative and qualitative data is vital to the investor database. Constantly adding newer entrants to the database gives a competitive advantage for that database over its competitors while also providing satisfaction for the clients that have paid for the service. At any given point in time, multiple analysts update the Magistral’s investor database on an ongoing basis

Accurate Data

When choosing an investor database, accuracy is critical. The data is undoubtedly sourced from reputable global sources by a third-party data provider. Examples are government listings, company directories, trade shows, websites, top journals, opt-in email addresses, and other authentic data sources. Furthermore, obsolete data serves no purpose. The purchaser must check if the provider does routine inspections to keep the investors database clean and relevant. A comprehensive purchase-ready database can engage with important investment decision-makers and convert them into qualified leads. Magistral sources its information from all reputed sources and provides verified information.

Reasonable Pricing

When buying an investor database, price is critical. Some database providers offer data for free. However, the database may be limited or have data fields that are missing or outdated. As a result, when looking for an investors database provider, the cost should be considered while ensuring that the other services are available. Magistral’s investors database only costs a few thousand dollars and provides the best value for the buck.

Additional Services

Providing more customized services along with the database adds to the value of any Investors Database. Customized leads of General Partners, Limited Partners, angel investors, and other investors tailored to the needs are hard to come by. So, supplying them will be a huge bonus. When it comes to finding investors for the required business, the possibilities are endless. There will be much trouble categorizing the data, wasting time, and making the overall process take longer. As a result, a database solution should be looked to separate data based on the investor’s industry, investment type, and other factors. An investor database should categorize and answer these questions based on investment focus, types, earlier investments, and geographies. Having the categorized data allows to easily search the database for investors who are suitable for the company. Therefore, less time can be spent exploring data and more time on innovative marketing and fund-raising initiatives.

The custom search possibility should be available in the investor database. As soon as the target investor is found, custom search lets browse data at leisure instead of through each contact. An investor can be searched by name, by type from a dropdown menu, or by market and location, they often invest. A good investor list is received in seconds without searching through the entire investor database using a customized search.

Magistral’s investors database provides customizable search options. On top of it, it offers customized services for leads generation depending on the specific requirements of the clients

Magistral’s Investors Database Composition

Magistral provides thousands of leads from Limited Partners, General Partners, HNIs, and other investors from across the globe.

Composition of Magistral's Investors Database

Composition of Magistral’s Investors Database

A lead’s information includes their name, verified email address, phone number, company name, address, and investment mandate. Magistral’s investor database is extensive, and a single-user subscription costs $2500 with a 6-month access window. In addition, five hundred personalized leads are provided, specially tailored for requirements. A continuous secondary search on the internet and referrals and personal contacts are the key database information sources. A committed crew updates the database daily. The database follows GDPR, but the user must ensure that the information given to leads is relevant to them and the needed disclaimers. It is not a clever idea to bombard leads with information. Magistral’s investor database is looked after by the in-house staff, who work on various fundraising projects and find these leads. Because these leads have previously been used to generate funds, they are trustworthy. This database is also for customers on a tight budget who want to get started with the least amount of money necessary. These could be emerging managers or unfunded startups.

Additional Services offered with Magistral’s Investor Database

For the leads not in the database, customized leads at a competitive rate of $1/lead can be provided. The analyst can be contacted and asked for a customized research quote if more information about an investor is needed than what the lead provides. Magistral Consulting supplies numerous value-added services to its clients, several of which are listed below. These additional services should not be confused with Magistral’s investor database.

Fundraising and investors reach out support

-Help with marketing and communications

-Target company profiling

-Due Diligence

Within three weeks of formal sign-off, customized leads would be given. For all inquiries, the client will be assigned a single point of contact. Magistral can also be contacted through the database. The outputs will be delivered in MS Excel and MS PowerPoint formats.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

By focusing on the fundamental variables that affect a company’s current business and prospects, the Equity Research and Analysis reflects the procedures used to estimate a security’s worth. It is the practice of analyzing the markets and companies to provide expert fund managers with recommendations on which stocks to buy. Equity research and analysis is the study of a company and its environment to judge the following:

– Whether to buy or sell its stock

– To calculate the price where one can bid for a target company

– To provide extensive financial insights and recommendations to investors on whether to purchase, hold, or exit a particular investment

Types of Equity Research and Analysis

There are three significant kinds of equity research and analysis explained below:

Economic Analysis

It entails evaluating or investigating subjects or concerns from an economist’s standpoint. This enables investors to examine the market from a broad perspective down to the individual stocks. Analyzing economic data may identify present market stability and understand the future.

Fundamental Analysis

Fundamental analysis is a method for finding a stock’s actual value. A stock’s current price may not accurately reflect its actual value. In the market, the stock might well be overvalued or undervalued. The fundamental analysis aids investors in determining the health of a company, resulting in the stock’s current value. This is accomplished by applying a variety of qualitative and quantitative parameters. The primary goal of this strategy is to find fundamentally sound organizations to make long-term investments in them.

Fundamental analysis examines connected economic and financial elements to determine a security’s intrinsic value. Fundamental analysts look at everything that can impact the value of a security, from macroeconomic issues like the condition of the market and industry circumstances to microeconomic elements like the company’s management effectiveness. The goal is to arrive at a figure compared to the current security price to determine whether these are undervalued or overvalued. Technical analysis, which forecasts the price direction by analyzing previous market information such as volume and price, is believed to oppose this stock analysis approach.

Discounted Cash Flow Analysis is a proven technique for fundamental analysis

Quantitative Analysis

It has to do with the information found in a company’s financial statements. It entails everything from collecting simple statistical information to doing complicated calculations. This study aids in determining investment possibilities, including when to purchase stocks.

Qualitative Analysis

It considers data that cannot be stated numerically. The factors usually included in the qualitative analysis are Management experience and performance, Industry and competition, and corporate governance.

Technical Analysis

Technical analysis is a study of patterns and statistical data to determine market trends and stock selection. It is a type of investment analysis that employs price and volume data, usually represented visually in charts. The charts are evaluated using several indicators to produce investing recommendations.

Importance of Equity Research and Analysis

The direct relationship between many local and global forces involved makes equity markets volatile. As a result, a better grasp of the equity market through equity research can help us better understand market changes and aid in the process of reaching our financial goals. As a result, equity research is fundamental, and the findings of equity research experts, from giant corporations to individuals who invest a portion of their assets in the stock market.

Equity research entails performing a comprehensive examination to determine the market value of a company’s stocks. Furthermore, it is used to indicate the probability of a rise or fall in its share price in a broader sense. It is common knowledge that the company’s expected financial results influence share price growth or fall over the next few years, and this serves as the analytical foundation upon which research analysts base their recommendations.

Importance of Equity Research

Importance of Equity Research

Because equity analysts interact with corporate management, they have a clear image of the firm’s current situation, and they have regular informal meetings with other research analysts, which allows them to propose a company’s position prudently.

These results will allow them to spot patterns in a company’s growth and fall, and investors will seek their advice, in general, to guarantee their investment goals are accomplished.

With the rise in volatility in the equity markets, decision-makers rely on equity research analysts who succeed at formulating premium equity research reports to measure the value of a company’s equity shares and try to decipher the likely future course of its fair price based on edging equity research report patterns. Along with the market for high equities research reports, there has been an increase in the demand for equity analysts to assess company fundamentals and advise investors on how to position themselves in its stock.

As a result of using top equity research reports or the expertise of a skilled research analyst, the investor would be much better equipped to make more cautious and educated equity market investing decisions. When done methodically and accompanied by research suggestions, equity investment can be considered a well-calculated risk that has shown to return many times for many investors.

Challenges in Equity Research and Analysis

– Obtaining data is the most challenging aspect of equity analysis. A large volume of data must be crunched in making informed market decisions, and the data quality supplied is crucial. The purpose of equity analysis should be to provide market information. Inefficiencies arise from a lack of information, resulting in stock misrepresentation.

– Technology is another crucial area as it is critical to have updated technology to analyze the financial data procured for equity analysis.

– Lack of capital is another factor that hinders equity analysis as it is equally important to have proper economic credentials to utilize the quality data and expert talent to analyze them.

Magistral’s Service Offerings in Equity Research and Analysis

Here is how Magistral helps its clients like Hedge Funds, Family Offices, Equity Advisors, and Other Investors in Equity Research

Magistral's Equity Research and Analysis Services

Here is how Magistral helps its clients like Hedge Funds, Family Offices, Equity Advisors and Other Investors in Equity Research

Fundamental Equity Research and Analysis

Fundamental analysis is the technique used to measure the stock’s intrinsic value. This analysis comprises customized models, quarterly earning reviews, earning call reviews, and equity and Industry themed reports which are further discussed below:

Customized Financial Models

Financial customized models are numerical representations of a company’s business throughout the past, present, and the predicted future. These models are designed to aid in decision-making. Company leaders could use them to estimate the expenses and profitability of a new project.

Discounted Cashflow (DCF) Modelling

It’s a method of valuation used to determine the present value of an investment based on its future cash flows. It helps to calculate how much an investment is worth today based on future returns. This can be applied to any investment or purchase of stock by company owners. It is a valuation method that can be used for private-held companies. DCF uses a discount rate to determine whether the future cash flows of investment are worth investing in. The discount rate is a risk-free rate of return.

Quarterly Earnings Review

A quarterly earnings report has been used to report results every quarter. Net income, EPS, earnings from continuing operations, and net sales are included in earnings reports. One can assess a company’s financial health and determine whether it is worth its investment by examining quarterly earnings reports.

Earnings Call Review

The information gleaned from earnings calls is used by analysts to conduct a fundamental study of the company. The company’s financial accounts are the starting point for fundamental research. Analysts will scrutinize these documents and listen to verbal indications from corporate management all through the earnings call. During an earnings call, analysts may inquire about main concepts or specific details in the footnotes, such as inventory and “less accumulated depreciation” sections.

Equity and Industry Themed Reports

It is in-depth research of a specific theme. Generally, themes are weighted differently for each sector. It identifies winners and losers in a single theme based on technology leadership, the position in the market, and other factors. It also improves the decision-making by a clear picture of fitting all stocks in a theme together.

Quantitative Equity Research and Analysis

It is the technique of using mathematical and statistical modeling, measurement, and research to understand the behavior of a particular stock. Analysts represent given reality in numbers. In data processing, cleaning and mining of data are done, and further, it is analyzed by correlation, regression, and various other tools, which are discussed below:

Data Processing and Analysis

Quantitative tools have now been routinely used to extract enormous amounts of data from several financial sources. To evaluate financial instruments, investment banks create equilibrium models; mutual funds use time series to identify risks in their portfolios, and hedge funds attempt to glean cues and statistical arbitrage through noisy market data. Quantitative finance’s ascent in the last decade is focused on creating computer systems that allow for the processing of enormous datasets. More quantitative finance research has shifted towards the microstructures of capital markets as even more data exists at a higher frequency. Data processing methods and quantitative frameworks are painstakingly constructed to efficiently extract information on financial data.

Commodities Performance Tracking and Analysis

Commodities go through cycles. When the supply of a specific commodity is scarce, prices will rise. Prices fall when there is an excessive amount of commodity in the market. Ideally, commodities that are performing at multi-year peaks or lows are viewed. The scenario tends to vary over time, resulting in a good trading opportunity.

Credit Equity Research and Analysis

Credit analysis is a form of financial research used to determine whether a company can satisfy its debt obligations. Credit analysis determines the proper degree of default risk when investing in a company’s debt instruments. Analysts perform a credit study on a company to determine its capacity to pay its debts. Following further analysis is performed to know more as explained below:

Country Risk Analysis

Establishing a country’s ability to transmit payments is known as country risk analysis. It considers political, economic, and social variables to assist businesses in making strategic decisions when doing business in a country. Every company transaction has some level of risk. Risks stemming from several national changes in the economic structures, policies, socio-political institutions, geography, and currencies are often referred to as country risks.

Company Risk Analysis

A company risk analysis assesses the likelihood of an unanticipated adverse event affecting critical company activities and projects. Organizations undertake risk analyses to determine when a negative consequence is likely to occur, the risk’s impact on a specific business sector, and where the risk may be minimized. In the worst-case situation, where an unexpected negative impact happens, a business analysis creates a control plan to return corporate operations to normalcy.

Reports and Newsletters

It is a strategic approach to creating and distributing valuable industry reports, indices tracking analysis, and event and news analysis. These are further discussed below:

Industry Reports and Indices Tracking

Industry reports are prepared using various tools, and further index trackers attempt to match the performance of a particular “index” of shares. It attempts to monitor the ups and downs of the index as closely as possible. It helps in choosing the better equity that is aligned with the index.

Event and News Analysis

An event study is a statistical method of evaluating the impact of a specific event or a piece of news on a company and its stock. A piece of bad news or event can bring the value of a stock down, whereas a piece of good news can bring the value of a stock upwards.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

 

 

 

Introduction

Portfolio Management for Private Equity and Venture Capital firms refers to the way in which the critical performance metrics are collected, measured, monitored, and tracked across the portfolio companies, and/or the active funds. Furthermore, such measures ensure that the capital is not subjected to excessive market risk. The capacity to make informed decisions underpins the entire process. Generally, Private Equity firms seek out underperforming or undervalued companies. By working with these companies, managers unlock significant value by:

– Improving business strategy

– Injecting managerial expertise

– Advance product technology

– Expanding distribution

Portfolio Management for Private Equity involves acquiring investment company ideas from a variety of sources and evaluating these to make an analytical decision. It is critical to rethink the portfolio regularly and practice the continual development of Portfolio Management methods.

Effective Portfolio Management for Private Equity leads to better IRRs for LP Investors

A PE or a VC firm invests in a company typically with 5+ years of the horizon. In early-stage investing, active management of companies to grow the valuation is imperative.

Even for late-stage investing, a well-balanced portfolio is critical in today’s world, as the perfect set of companies in a portfolio of private equity helps to grow. A good portfolio is a well-balanced combination of various companies, with funds allocated according to the firm’s tastes and risk tolerance. Building a portfolio is only the beginning of the task. In terms of returns and risk reduction, active management outperforms passive management.

Portfolio management is crucial because it reduces risk by diversifying and redistributing cash across different companies in the portfolio based on their performance. It also aids in the preparation of tax requirements. It also aids in the organization of money in times of need.

Factors affecting Portfolio Management for Private Equity

Private equity is undoubtedly a very competitive industry. It has been traditionally known for cutthroat business focused on cost-cutting and profit generation. This trend has slowly shifted in recent years. Now, Private equity looks for such companies in their portfolio which generate value over the long term.

Factors that impact PE Portfolio Performance

Crucial Factors leading to the success of a PE portfolio

Some of the factors which are taken into consideration in Private Equity portfolio management are:

Market Competitiveness and a Company’s Positioning 

The market’s competitiveness will significantly impact an individual company’s ability to achieve long-term success. A market with much competition offering identical items is likely to be less profitable.

Growth Potential 

Private equity firms are increasingly talking about companies where they would infuse both financial and organizational capabilities and industries that can accomplish growth in numerous ways.

Value Creation Potential 

The companies that operate in markets with untapped value creation potential are more attractive. Private equity firms prize the ability to minimize costs and increase existing capabilities for new revenue streams.

Low CAPEX 

If a company operates in a sector that will necessitate a significant amount of initial funding, a private equity firm will view this as an obstacle and will want to spend less for the company. In contrast, if a company already has the capital it needs to perform business and expand, a private equity firm would be willing to pay a higher price for the acquisition.

Regulatory Obstacles and Costs 

Regulatory barriers and costs could significantly impact the price of a company that operates in a particular sector. When making a bid to add a company to a portfolio, private equity firms recognize higher tax burdens.

Industry’s Most Recent Trends

The latest industry trends and possibilities for expansion have a significant impact on a company’s valuation. Companies that compete in the market can be more desired from private equity firms’ standpoint if the industry is predicted to proliferate, is considered particularly innovative, or needs a specific technological capacity that is hard to acquire.

Improving Private Equity Portfolio Performance

Effective project delivery and the ability to make modifications are key to improving portfolio success. It cannot be expected that projects that have been approved will produce the intended outcomes. Their worth, risk, and cost must all be assessed regularly. Projects should be discontinued or replaced if underperforming and have better alternatives.

Data analysis should be considered when making decisions. It is critical to collect ideas both internally and externally and choose the correct initiatives based on standards and statistics. Projects must be effectively managed. Methods, processes, and competencies for the project and program management must be improved, while clarity in project performance and risk need to be encouraged.

Improving PE Portfolio Performance

Improving PE Portfolio Performance

Portfolio Management is a continual activity, not simply an annual event, so planning should be done more frequently. The cost, risk, benefits, and coherence of authorized projects should all be reevaluated, with higher-value or lower-risk alternatives being considered

Technology’s Role in Enhancing Portfolio Performance

Better technology ensures that data from other processes, such as project, resource, and economic management, is timely and accurate. It also allows for the detection of underperforming projects and reduces effort and time spent on portfolio management tasks, allowing for continuous planning. It enables speedier re-planning when budgets alter, or new projects are made mandatory by providing analytic support in considering numerous ideas and projects simultaneously. It also gives process participants, stakeholders, and constituents access to reporting and transparency.

Role of Outsourcing

Outsourcing is the practice of hiring a third-party organization to carry out services that were initially performed in-house. The shift towards a customer-oriented business model resulted in outsourcing and therefore it became an important part of business economics in the 1990s. In only a few decades businesses realized in order to stay relevant in the industry, they need to focus on increasing the customer value of their services or products. Since then, businesses turned more towards the concept of outsourcing.

Outsourcing is even more critical for PE acquired businesses as they need to create value and savings quickly due to their investors’ pressure.

Here are a few fundamental benefits of outsourcing:

– Reduced costs are one of the primary advantages of outsourcing. These costs only arise when the process is ongoing, when these processes are not required, no bills are generated.

– Outsourcing partners are experts in their domain; therefore, they are quick and efficient in the organization’s process.

– Their expertise leads to increase quality and better results. They deal with the specific task with a matter of routine and precision.

Experienced outsourcing vendors provide cost savings with expertise, therefore it’s a better return on the company’s investment.

Magistral Service Offerings for Portfolio Management for Private Equity and Venture Capital

Magistral has helped multiple Private Equity and Venture Capital firms in managing their portfolio in the cycle of acquisition, value creation, and securing a profitable exit. Expertise when combined with Outsourcing brings quality and cost-effectiveness to the strategic decisions made at the portfolio companies.

Magistral's Portfolio Management Service Offerings for Private Equity and Venture Capital

Magistral’s Service Offerings for Portfolio Management for Private Equity and Venture Capital

So here is how Magistral helps:

Strategy

This is the most important part of the planning, which comprises the following:

– Identifying Add-On Acquisitions and Potential Buyers: Finding relevant M&A opportunities help in lowering the cost by merging the staff members with similar expertise, expanding into new regions, consolidating management and finances, and boosting the buying power.

– Planning Fund Raising Strategies: Here, a basic setup is made for fundraising such as LP research, LP reach out through calls & e-mails, preparing content, partner profiles, etc.

– Exit Strategy: Various exit strategies are made including a trade sale, which is the sale of a company to another PE firm, or a secondary buy-out for a medium or large portfolio company.

– Market Growth Strategy: Profitability, Growth, and Performance are the major objectives for Portfolio Management for Private Equity. Various strategies are formed to keep the portfolio growing.

– Content Marketing: This step helps in marketing the content for the acquisition of add-ons or potential buyers for private equity.

Analytics

The second major step involves analytics of portfolio management for Private Equity and Venture Capital. Analytics include the followings:

– Financial Reporting and Analysis: It is the process of documenting and communicating financial activities and performances over specific time periods. It depicts the financial health of the companies. This can be further done by performing trend analysis, common-size financial analysis, financial ratio analysis, and benchmark (industry) analysis.

– Preparing Dashboards: Various dashboards are prepared by cleaning the data, selecting the right chart, and building the perspective using predefined templates which helps in making a clear and better decision.

– Data Visualization: Information or data is then represented by visual elements like charts, graphs, and maps. It’s the most accessible way to see and understand trends, outliners, and patterns.

– Text Cleaning and Mining: Text cleaning and mining refer to artificial intelligence technology that uses natural language processing to transform the free text in documents and data into normalized structure data suitable for analysis.

– Predictive Modeling: It is a statistical technique using machine learning and data mining to predict and forecast likely future outcomes with the aid of historical and existing data. It works by analyzing current and historical data and projecting what it learns on a model generated to forecast likely outcomes.

– KPI Tracking: Key Performance Indicator (KPI) helps in monitoring performance metrics.

– Web Scraping: It’s the process of using bots to extract content and data from a website.

Sales

After analytics, the sale is taken care of by performing the following activities:

– List Generation: Final list is generated on the basis of various factors.

– CRM Cleansing and Management: It is performed to improve the overall quality of our data so that it increases the overall productivity of the portfolio.

– Competitive Intelligence: Competitive Intelligence research is the data gathered to know and analyze competitors. It helps in making better strategic decisions.

– Social Media Management: It helps in promoting the sales of a particular portfolio by the means of social media.

Financial Planning

Financial Planning while portfolio management for private equity is an important step as it helps in developing overall goals and creates a plan of action to achieve them. This step majorly includes the following:

– Budget Preparation: It’s a process of preparing an outline of planned future activities by making available funds, expenses, and future incomes into account.

– Forecasting: Historical data are used as inputs to make informed estimates that are predictive in determining the direction of future trends

– Competitive Quarterly Earning Updates: Final step is to make competitive earning updates.

Procurement

Its purpose is to develop a fully comprehensive picture of procurement. Following are the steps performed:

– Spend Analysis: In this, we analyze the past and projected procurement expenditure or spending for services or work

– Vendor Identification: In this, business requirements are identified and analyzed, and then developed to finally evaluate the vendors

– Spend Base Cost Reduction: This is performed to systematically boost productivity

– Category Strategy: It is an excellent tool that should be the procurement team’s work. It maximizes the value and efficiency

– RFP Support: RFP stands for Request for Proposal, it’s a business document that announces a project, describes it, and solicits bids from qualified investors

 Typical Outcomes of our Portfolio Management Services

– 30-50% reduction in cost operations

– Up to 20% improvement in sales for companies operating in B2B segments

– Up to 20% reduction in Procurement spend base

– Up to 10% improvements in gross margins due to advanced analytics

– 30-40% improvement in plan compliance

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

 

 

 

Introduction

Deal origination for Private Equity or Deal sourcing is the process by which investment firms identify opportunities. Larger volume deals are sourced to maintain a viable deal flow. Building a deal flow is the most important step because making good investment decisions is reliant on seeing many deals and selecting the best among them to pursue.

The effectiveness of the deal origination process ensures a healthy portfolio of investments that further ensures healthy returns to the Limited Partner investors. Hence its business-critical for a Private Equity firm to make sure the deal origination process works, and works well to meet the investment objectives.

Some venture capitalists, private equity investors, and investment bankers use various methods to source deals whereas some firms reach out to a team of specialists to help with the process of deal origination via outsourcing.

Deal Origination Process for Private Equity

There are multiple approaches to Deal Origination for Private Equity Firms. Some of them are

Traditional Outbound Approach

Here, the deal origination and sourcing largely depend on a wide area of personal networks, contacts, and the good reputation of the firm. Having knowledge of specific industries and the idea of similar deals taking place in the market is an added advantage for placing bids. This approach becomes successful only on the firm’s broad network of contacts, referrals, and a good reputation among founders. Firms compete against each other in process of bidding and their success depends on gaining specific industry knowledge. This typically leads to overvalued assets as all VCs and PEs are looking at the same deals.

Pros of outbound deals:

  • No matter how much things have changed but still the fundamentals of sales remain the same as they are based on human nature. And that makes outbound deals still very successful
  • It’s predictable and gives immediate results on the outbound process as it involves getting instant feedback from the prospective targets

Inbound deals

Inbound deal sourcing refers to all incoming leads, whether they come from existing relationships or unknown founders seeking investment. This is when a founder approaches the firm due to networking, good reputation, or word of mouth about the firm.

Pros of inbound deals:

  • Owners and operators are more likely to meet when they share a connection with you already
  • A shared network gives more knowledge which helps in creating more personalized interactions, giving a competitive edge
  • These deals move comparatively faster as introductions are warm and made only when seeking investments

Outsourced Approach

Traditional methods are nowadays giving way to modern online dealing platforms. Several financial technology companies help in deal origination for private equity firms and enable them to go beyond their network of contacts and source deals by reaching a broad audience on the basis of various criteria. Some parts of the investing value chain are outsourced to reduce operations costs while still maintaining quality and effectiveness.

Pros of Outsourced Approach:

  • Cost-effective
  • It casts a wider net of reaching out to target companies, that ensures exclusive deals that may help a Private Equity firm in delivering outsized IRRs for its Limited Partner investors
  • The deal pipeline continues to be populated in spite of multiple demands like new deals from the top management of the firm
  • The SOP ensures standardized elimination of targets not suitable to PE’s investment philosophy
  • Netting in the assets that are fairly valued

Magistral’s Process of Deal Origination for Private Equity Firms

There are various steps involved in the deal origination of private equity firms. These steps include Industry Research, Making SOPs, Evaluating, Ranking, and Contacting the shortlisted companies.

Magistral's Private Equity Deal Origination Process

Deal Origination Process for Private Equity

Industry Research 

This step focuses on taking out a list of companies that looks fit in terms of market position, competitive advantages, multiple avenues of growth, stable and recurring cash flows, low capital requirements, strong management team, favorable industry trends, etc. The inputs from research feed into the next step of SOPs

SOPs

This step is considered majorly after discussion with the clients, standard operating procedures (SOPs) are prepared in order to take care of the requirement of Private Equity clients while performing deal origination and deal sourcing process. A formal signoff is taken from the client once all the steps in detail are identified. Magistral performs this step for its clients without any cost to them

Evaluation

Various criteria are looked into while evaluating a target. Some of these are related to investors such as the investor’s ability to fund, if multiple investments can be made, if the investor has an interest in lead investing, his level of portfolio diversification, etc. The major part of the evaluation of the target is to ensure it meets the investment philosophy of the investor and is in a position to generate value over the investment horizon. The factors like industry, sub-industry, niche, management, team, past fundraising, strategy, marketing, finances, etc are evaluated for targets.

Ranking

On the basis of the above research, the analysts rank the various targets which best align with the investment philosophy of the Private Equity firm. The targets are ranked as per the suitability

Contact

 The final shortlisted investors are then contacted via mail or calls in order to close the best possible deal for a private equity firm. All the support required during the negotiations is provided as well.

Magistral’s Private Equity Deal Origination/ Deal Sourcing Case Study

The client and the business situation

A leading private equity company, investing in a broad range of markets such as energy, retail, and technology. The client wanted to deploy the capital to meet up its investment strategies and therefore wanted Magistral to find the best deals for the company at good valuations.

Magistral's Private Equity Case Study

Magistral’s PE Deal Origination/ Deal Sourcing Case Study

Magistral’s solution 

  • Magistral appointed a dedicated manager for taking the existing list of potential target companies, populate it further, and review them carefully
  • Standard Operating Procedures were made at no cost to the client to nail down the process to its finest details along with research and ranking methodology
  • A team of analysts started evaluating and ranking targets on different parameters already set out in the SOP
  • Shortlisted companies were contacted via call or mail and then the agreement was taken forward for all the documentation and deal negotiations

Outcomes

  • Within 6 months, the firm was introduced to more than 30 opportunities.
  • The effort resulted in detailed due diligence with two transactions that were quickly closed

Typical Outcomes of Magistral’s Deal Origination Services for Private Equity

According to a recent survey, 88% of private equity investors indicate their most important 2021 objective is deploying capital- a nearly 10-point increase from last year.

While working with Magistral, IRR is improved due to an exhaustive scan of the investible universe. There is approximately a 30-50% reduction in operational costs for target screening. Database costs are justified through rationalized services.

Over the years, Magistral has delivered multiple analyses that go into supporting and facilitating million-dollar global transactions. The team has so far worked with 200+ clients and facilitated transactions worth billions of dollars.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

 

 

Introduction

From Dutch East India company’s IPO to the largest IPO of Rivian, the Global IPO market as a whole has come a long way. There are multiple global IPO trends that are currently shaping it. The world’s IPOs raised $608 billion in 2021 with the technology and consumer sectors topping the list.

“An IPO is like a negotiated transaction- the seller chooses when to come public- and it’s unlikely to be a time that’s favorable to you” – Warren Buffet

As governments across the world announced covid vaccine programs and stimulus packages, the markets recovered in an unprecedented way.

There was a  worldwide surge in retail investors with active investor accounts increasing by a record 10.4 million in India. There were roughly six million Americans who joined the market by downloading retail brokerage apps. With favorable market conditions and high liquidity, 2682 deals have been finalized globally in the run-up to the IPO. There are many cases of IPOs where venture capital and private equity firms have made tremendous profits by exiting, which is called offering for sale (OFS).

Now the question arises “What’s driving the surge? why even after the pandemic retail investors are taking the risk? Why is there an increasing trend of Venture capital/private equity-backed companies getting a listing on the Stock market? what are the lessons that we can learn from 2021-the year of Investors?

Major Global IPO Trends

IPO trends that are shaping the global markets

Global IPO trend-“The Revitalization”

Massive covid-19 vaccines roll-outs, government stimulus packages, and welfare policies have acted as moral suasion for security and stability. The rebound of global economies with stable growth projections provided an impetus for the pandemic-propelled companies to grow. India has been ranked third in the world behind the US and China in terms of unicorns, disrupting the start-up universe. This clearly shows the growing importance of start-up investing as Technology IPO proceeds increased from  $54billon to $92billion with the Americas and Asia-Pacific the key markets.

Hottest Sectors

In terms of sector share, technology and health grabbed investors’ attention with a worldwide share of 21% and 14%( excluding SPAC IPOs) respectively. The fusion of technology and health would be a future, and investors would embrace it to stay relevant in the coming years.

Climate-focused tech start-ups are becoming increasingly popular with the ability to grow at a breakneck pace. Factors such as favorable government policies and public awareness of climate change are helping to mainstream the issue.

Diversity

Gender-lens investing(GLI) i.e investments in firms that are led by women, serve women customers or have a gender-balanced approach. The recent successful IPO of NYKAA is the perfect example of how gender-smart investing gaining momentum globally. According to the First round capital research, the founding team that includes both men and women gets stronger valuation growth than the all-male team.

Technology

With the successful IPO of Coinbase, there are companies across industries planning to accept cryptocurrency as the mode of payment. The biggest hurdle for the industry is regulations, once they are cleared investors can tap the trillion-dollar opportunity.

Hottest Regions

By region, the US had the largest share of global proceeds which was 57%. EMEA(Europe, the Middle East, and  Africa) had the highest relative year-on-year growth of 367%. In the Asia Pacific, there was a steady growth despite resurgent covid 19 waves in the region.

Even though there was geopolitical tension between the countries, there was a positive environment for IPO activities across many markets including the US, China, Europe, and this would remain the same in the coming years.

Global IPO Trends- The role of retail investors

Factors like increased isolation, lockdowns, more time for introspection, restricted spending, and more cash in hand are some of the factors that urged retailers to go for the investments that they had never done. Now, terms like IPO, Bull run, Startup, Investment, gross margin are being discussed in the family, all thanks to SharkTank. Fixed deposits or mutual funds are not the preferred mode of investment anymore.

With the restricted movement, increased digitalization, and use of social media for almost everything, there is a well-established ecosystem supporting retail investors in every possible way. A recent case of how Reddit users toppled GameStop’s share price is a perfect example of how social media can influence stock markets. Today’s generation is curious, ready to try new things, aware of the global trends whether it is for investments or Tiktok, and the only positive thing that came out of the pandemic is that people are now more mature, and they do not see profitability as the only factor.

Global IPO Trends- Venture capital and Private Equity-backed deals

According to the EY report, In 2021 – 33.6% of global proceed were the deals that are (were) backed by Venture capital and Private Equity firms with the USA having more Venture capital and private equity firms backing IPOs. The US and Europe had 56.5% and 41.1% of global IPO proceeds respectively. There was a slight increase in the cross-border global IPOs which accounted for 18.8% of proceeds in 2021 as opposed to 10% in 2020.

According to a McKinsey report, there was a growth of approximately 20% in the private market in 2021. Private equity remained the highest performing private market asset class.

With the buoyancy in the secondary market and new retail investors entering the market, Venture capital funds and PE firms benefitted the most as seen in the global IPO trend for Offer for sale(OFS).

There was $43.2billion worth of exits made through deals in 2021. Private equity and venture capital investments were 62% higher as compared to 2020 in India. With the booming start-up culture around the world, particularly in Asia, everyone is searching for new ways to invest, and private equity has emerged as the perfect alternative.

The future

The Key concerns are ongoing geopolitics, invasions, higher inflation, new covid variants, higher volatility, lack of knowledge of new-age retail investors. The businesses that sail through these would be likely to grab the investor’s attention.

Ecommerce and financial technology dominated the year, with consumer technology and digital media expected to take center stage in the coming years.

A mix of both technology and the health sector is going to be the center of attraction for years to come. There is a need for more climate tech start-ups like Rivain as climate change problems are here to stay if not dealt with properly. Sustainable mobility is seen to be the investor’s interest as of now. All the governments are changing their policies to become more favorable for electric vehicles.

The global crisis triggered by covid-19 has escalated the need for investments that are more gender-smart. The role of impact-driven investors would be of great importance for the global IPO market.

Crypto Economy is still quite volatile but gaining traction with companies like Coinbase-the largest cryptocurrency exchange in the US making way for others.

There are a lot of IPOs in the pipeline like Reddit, which will drive the growth. All we need is to have an impact-driven approach to counter the after-effects of Covid-19 and make a profit in the long run.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

 

 

Introduction

As the COVID 19 pandemic continued to threaten investor sentiments the PE industry was also affected by it. In an increasingly connected world, this is a fact given that the effect of changing trends in one part of the economy is bound to affect trends in another part of the world – a sort of chain reaction. The PE market saw a decline in 2021 in deal-making with the firms becoming more risk-averse and the focus being on stabilizing current portfolio investments.

However, the second half of the year 2021 started seeing more investments with the markets showing more resiliency regions like the Asia Pacific seeing a doubling of the number of investments as compared to 2019. Overall, $628 Bn worth of capital was raised in 2020 which was 20% less than that in 2019.

The dry powder had increased, with the amount swelling to almost $2 Trillion dollars which is close to a record all-time high. IT and healthcare were two of the major focus areas during this time.

Political unrest, the increased adoption of digital technologies, and the increased adoption of ESG are some of the key trends which have been shaping up the industry. This has forced the managers and PE investors to rethink their investments strategies. They have done this by steps such as looking at reshaping their current investment models as well as by relooking at their portfolio investments.

The key to survival in such a scenario is adapting quickly to changing market dynamics, adapting and acting quickly by taking into account the major trends shaping up the industry as well as thinking broadly and executing region and sector-specific strategies. One such example is the adoption of digital technologies so that the entire organization can be on the same page and be swift and nimble to market changes thereby becoming more operationally resilient.

To such an end this exercise would require one to rethink their mandate and investment strategy as well as their business operating models and methods. Greater involvement with key stakeholders and engagement with industry leaders is one such methodology to counteract the ill effects of COVID 19.

Technological changes in themselves is a megatrend impacting all sectors and investments

For us to understand how the Private Equity industry is being affected by the COVID 19 pandemic we must also understand other underlying dominant forces which are shaping up the world.

The Deep Tech revolution

One must have heard of the space race between Blue Origin and SpaceX. Space travel has become a reality and has captured the public imagination. This is one such instance that has seen a diverse and vividly imaginative and technically sound staff coming under one roof to fulfill its mission of space travel.

Quantum computing and the rise of Artificial Intelligence

With the achievement of quantum supremacy as announced by Google and IBM we are slowly but surely entering the age of super intelligence where experts foresee the end of classical computing and Moore’s law with classical computers being replaced by exponentially faster quantum computer cousins. It will soon find its way into automation of services such as credit approval, granting of loans, and automation of several banking processes.

Online security and online data protection

There will also be an increase in rule-breakers when it comes to the world of finance and hence online security and online data protection will be one of the services most in demand.

Cryptocurrency, Blockchain and the world of digital payments

As the internet penetration increases and with adoption and connection by leading technologies such as 4G disruptive services such as cryptocurrencies, blockchain, and digital payments will see a rise. This is evidenced and catalyzed by e-commerce and e retailing which boast of contactless payments to their customers.

Key trends shaping up the global Private Equity industry

It is important to understand the investment trends especially in the US which is the heart of the Private Equity and Venture Capital Industry. Investments by them in startups have increased over the last 20 years yet their rate of return has been below average or just above the average of major stocks listed in the stock markets (even though in the last 10 years they have outperformed the S&P index).

Viewed overall, this is a major problem for the US economy as it not only discounts the innovation premium on which US companies pride themselves but it also affects the investment sentiments of the investors at large.

With this in mind let us look at a few of the latest trends in Private equity investments

Increase in Mergers and Acquisitions

As compared to traditional IPO’s and funding for more traditional ways of organic growth, it is the Mergers and Acquisition route that the Private Equity firms are gravitating towards. One major focus area for this is the insurance sector and the major geographic area are countries like China and India as they ease the rule for participating in their domestic economies.

This trend by the PE/VC firms towards mergers and acquisitions rather than following the traditional IPO route is the primary reason why the returns from investments in startups have been on the decline.

Global Private Equity Trends

Global Private Equity Trends and its impact on PE returns

Focus on Special Purpose Acquisition Vehicles (SPAC’s)

A SPAC is a company that has no commercial operations of its own and has been raised specifically to raise capital through IPOs to acquire or merge with an existing company.

Just to get an idea of the volume of transactions involved, around $80 Billion worth of money was raised by 247 SPACs in 2020 and this amount went up to $96 Billion from 296 SPACs in 2021.

Lowering of interest rates

The decrease in investments activity has meant a fall in rates globally. The coming year 2022 is expected to show a rise in borrowing activity complemented by a not so rapid rise in interest rates.

The rise of the startup ecosystem

The startup ecosystem will be an area of continued focus which means increased investments in cities like the Silicon Valley and much closer to home cities like Bengaluru and Mumbai. However, PE firms are more likely to stay vigilant and go slow with the focus being on sound financial stability as well as relatively risk-free returns.

By June 2020 the number of Unicorn startups in China rose to 227 rivaling those in the US which had 233. The size of Global Unicorns is close to $2 Trillion which although huge means there is still scope of expansion in other geographies of the world.

Some of the global startups include the fabled FAAMNG (Facebook, Amazon, Apple, Microsoft, Netflix, and Google) which accounts for more than 25% of Standard and Poor’s total market capitalization.

Conclusion

The year 2021 has been a watershed year for us with the COVID 19 pandemic teaching us vital lessons. Companies have not only learned to respect uncertainty but also learned that they need to be nimble and agile when it comes to dealing with real-world situations. Hopefully, these lessons will be remembered by us for generations to come.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

 

 

Background

Decades ago, investment was done mainly through referrals or through knowledgeable sources like banks and private investment which was heavily based on the financial statement analysis of a company. The investors in the company were far and few. With no internet and adequate means of communication, investment or expansion of a company was a herculean task, then. Investors Database came into existence riding on the internet and information availability.

The world has now progressed to a stage where there are companies that are specifically dedicated to researching and providing access to investors’ databases. Although there are a plethora of options for startups or firms to raise money, there are very limited ones for Private Equity, Venture Capital, Hedge Funds, or Emerging Managers. Even if there are options, the prices for the same are prohibitive specifically for Emerging Managers who are on a shoestring budget.

Magistral’s Investors database

Our investors’ database is a collection of useful information about investors like LPs and GPs such as Private equity firms, Venture capitalists, Investment banking, Sovereign Wealth Funds, Family Offices, HNIs, and investment management firms. Each lead contains information such as their contact name, contact email, designation, company address, investment interests and specializations, investment geographies, and philosophy, etc. which is obtained mainly through sources such as secondary research, referrals, and personal contacts.

The purpose of the investor database is to facilitate the interactions between investors and business owners or Investment Managers and Limited Partners to invest in their firm or the fund. This can be done for multiple purposes such as seed capital funding, early-stage funding, expansion of business as well as late-stage funding in the case of companies. For funds, the obvious benefit is to close the funding rounds faster

Magistral consulting has a database that consists of General Partners, Limited Partners, Angel investors, and High Net Worth individuals (HNI’s) who have the resources and money available to invest in a business or a fund.

Problems with Other Solutions in the Market

There are various questions that one must answer before one agrees to pay for an investor database. Some of them are –

Costs: the costs associated with a database are large with some being as expensive as $30,000 to $80,000 for complete access. Costs are prohibitive for Emerging Managers.

Ease of Use: Very few players in the market allow for an easy-to-use interface for accessing the database

Excessive Information: Most of the information provided is not really relevant for a company. They need access to a limited number of resources.

Customized leads: Customized leads of GP’s, LPs, angel investors, etc. tailored as per your requirements are not easily available in the market. They have to pay for accessing the entire database.

Features of Magistral’s Investor Database

The database of Magistral consulting is exhaustive with $2500 cost for a single user license which has an access window of 6 months. In addition to these, an additional 500 customized leads are provided which is specifically tailored to suit your needs. So, for example, if you are looking for investors in Latin America in the specific domain of real estate specifically, these can be researched and given access to customized leads.

In addition to these is the fact that these leads are researched and updated on a daily basis by a dedicated team of analysts so that you can stay up to date with the latest list of investors in the market.

A simple, easy-to-use interface offers ease of use without any technical support required.

Magistral consulting offers a list of over 5000+ general partners, 3000+ limited partners, 1000+ angel investors, 3000+ other HNI’s across the geographies of the United States, United Kingdom, Europe, India, and the Rest of the World.

A snapshot of sample data is given below:

Database Sample Data

Sample Data from the Database

Frequently Asked Questions (FAQs)- Magistral’s Investors Database

What type of investors are there in the database?

The database contains 25000+ leads of international Limited Partners and General Partners

 

How do I search the database?

It is very simple. You are given a user id and password and you can access the database immediately upon receiving the login credentials.

 

What investor information is provided in the database?

Following are the fields of information that are provided upon accessing the database.

Company name, company type (family office, private equity, venture capital, etc.), name of the investor, email id, LinkedIn id, company address, and the industries they invest in.

 

What is the source of information of the database?

The primary source of information about the database is a continuous secondary research on the internet as well as referrals and private contacts.

 

What is the frequency of updating the database?

The database is updated on a daily basis by a dedicated team

 

How much does it cost?

It costs $2500 for a single-user license which is valid for 6 months. Customized leads are provided in addition as a value-added benefit to our clients.

 

Can I trust the database?

Yes, you can trust the database wholeheartedly as these are well researched by our internal team.

 

Do you introduce the investors as well to the contacts I find?

No, as a practice we don’t introduce the investors to our clients. However, there are several value-added services that Magistral consulting offers to its clients, some of which are given below. These are separate from the investor database.

1. Fundraising and support

2. Marketing and communications support

3. Target company profiling

4. Due diligence

These are just some of the services that Magistral offers to its clients. For more details, drop a line at https://magistralconsulting.com/contact/

 

Can I download the data?

No, you cannot download the data. However, as mentioned earlier it is very easy to access. It is just like accessing an email or a web account where an account has a user id and a password.

 

There is a demo video for viewing how the database works available on youtube.com. Given below is the link given for it.

Link: https://www.youtube.com/watch?v=33tY_v737P0&t=16s

 

What are customized leads?

Customized leads are leads that are domain-specific or country-specific etc. which are provided on request. Say for example if one requests for real estate investors in Brazil, this can be provided upon request. This means 500 additional leads are given over and above the leads which are already present in the database.

Process of accessing the Magistral’s Investors Database

The process of accessing the database is given below.

Magistral Investors' Database Process

How to get access to Magistral’s Database?

Delivery and timelines

1. Database username and password would be sent to the client within 48 working hours after receiving the payment.

2. Customized leads would be delivered within 3 weeks from the date of formal sign-off.

3. The client would be assigned a single point of contact for all queries. The client can also contact Magistral through the database.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

The article is an effort of the Marketing function of Magistral Consulting. For any business inquiries, you could reach out to prabahsh.choudhary@magistralconsulting.com

 

 

ESG – An Introduction

With increasing changes in business needs and businesses tuning onto global trends like climate change and responsible corporate social responsibility, ESG Investing has emerged as one of the hottest trends in corporate parlance and governance. Its imperative then it is considered while making investment decisions aka ESG investing

ESG stands for Environmental, Social, and Governance. It is a non-mandatory part of financial reporting. But as it stands out, to differentiate itself from others as well as the need to project itself as a responsible company with a truly global outlook more and more companies are incorporating them in their financial reports.

Although much needs to be done on this front, there are bodies like the Sustainability Accounting Standards Board (SASB), Taskforce on climate-related Financial Disclosures (TCFD), and Global Reporting Initiative (GRI) that have taken on themselves the onus of setting standards and benchmarks for the companies to follow through. The oldest framework of course is the GRI which has been adopted by more than 13,000 organizations in more than 90 countries.

The market for green bonds has boomed. According to a report by Climate Bond Initiative green bonds are set to reach $400 Bn to $500 Billion in 2021 which is nearly double than that in 2020 when its value was $270 Billion.

According to BAML, 90% of bankruptcies in the S&P 500 during the period 2005-15 were of companies with low ESG scores.

Not only big companies but this is also bound to have an impact on how institutional investors decide on their investment targets.

Emerging Trends in ESG Investing

Global sustainable investment is now more than $30 Trillion which is a tenfold increase in spending since 2004. The coronavirus pandemic has further led to much unrest and the onus is now on the companies to create a resilient, sustainable, and responsible organization.

To illustrate the above factors, let us for instance focus on the trending issue of climate change which is a pressing environmental concern. Climate change is a challenging global problem and it requires us to think in different ways in not only understanding the key problems but also think in different ways in how we can reduce greenhouse emissions. It requires adapting not only new technologies but more importantly a human mindset whenever we try to address this problem.

Similar is the case with social compliance. As the world diversifies into a seemingly single entity where the borders between nations are blurring. So, is the pace of change in organizations where key studies in organizational behavior and strategic human resources management are compelling one to take a different view of how organizations should operate. Since the times of Peter Drucker and his theories on management, it has but become imperative to adopt these management concepts in a manner that not only broadens the viewpoints of the individual but also of the organization at large.

Although there are several ESG frameworks in practice, for simplicity’s sake a sample ESG framework has been given below.

ESF Framework

ESG Framework

Companies are benchmarked on these standards although there are more standards to abide by. Each ESG framework allocates a different criterion and scorecard based upon which the companies are rated and then an overall score is provided.

Impact of ESG on Business and Investing

There are a few major points that affect how business functions when it comes to ESG factors influencing them.

1. Company reporting – As discussed above we are still in a working stage when it comes to industry benchmarks set by boards like SASB, TCFD, and GRI. Hence, the companies who comply with their norms are more likely to have the first-mover advantage and consequently be viewed as long-term responsible companies both in the eyes of the clients as well as the shareholders.

2. Impact on investor analysis and decisions – Investors rely on a mix of internal and external data when it comes to making decisions as to investing in a particular company. In fact, there are ratings provided by companies like Magistral consulting which help investors in decision making.

3. Responsible investor reporting – An increased ESG compliance gives companies a key advantage in regions such as Europe which are looking to adhere to the new standards. Besides it is a matter of time before these standards become a norm rather than a guideline

4. Improvements in productivity – Significant cost reductions and operational efficiencies are achieved by companies that have adopted these frameworks.

5. Better resource utilization– ESG frameworks adoption ensure better long-term utilization of resources (eg. plant and machinery) when considered over a long term

6. Increased environmental awareness among consumers– Thanks to climate change becoming a hot topic in the recent decade, consumers have now become more socially aware and more than 65% of them are willing to pay a premium for “green goods”

7. Greater employee productivity – When employees look at a company that is committed to environmental and social causes as well as following good governance practices it has been observed that companies see greater loyalty as well as ownership among its employees simply because the company cares for issues that are over and above itself

A pertinent question to ask is how does it affect sectors like private equity and hedge funds? The answer is that they are more likely to invest in companies with ESG compliance especially after the aftermath of the COVID 19 pandemic. They have started to incorporate ESG factors into their decision making which is why they have invested close to $21 Billion into ESG focused funds in 2019 alone.

According to a survey business ethics, bribery and corruption and occupational health and safety were the top 3 factors when it came to private equity investments with more than 80% of respondents citing it as the top factors. Other factors included waste management, employee development, and talent attraction and retention.

A sample ESG scorecard: A sample ESG scorecard of Magistral consulting is given below to show how ESG is benchmarked and rated.

Magistral's Sample ESG Scorecard

Magistral’s Sample ESG Scorecard

The best way to incorporate ESG in investing decisions

Though ESG and its impact on investments are growing exponentially, it’s still a relatively new development. Expertise is limited.

If one is interested in incorporating principles of ESG in investment decisions, the best way to go about it is by outsourcing the research and analysis process to an expert service provider like Magistral

Magistral not only brings years of expertise in evaluating investment opportunities from an ESG lens, but it does also so in a very cost-effective way by combining expertise with outsourcing to locations where the assignment could be delivered cost-effectively.

The result is more robust investment decisions with savings in operations costs!!

Why Magistral consulting?

Magistral consulting offers solutions in the following categories –

ESG policy and frameworks- Magistral consulting ensures that appropriate ESG policy and frameworks are applied to the company as would best fit their requirements.

Target company due diligence (financial, operational, and ESG)- Performing adequate due diligence not only in terms of financial but also ESG compliance standards.

ESG scoring, rating, and benchmarking—A value-added service where companies are rated and scored as well as benchmarked as per the standards laid out in the ESG framework.

ESG compliance monitoring- Magistral consulting also ensures that not only are companies benchmarked as per the standards laid out in the ESG framework but they are also following the norms once it comes to the day-to-day running of activities in the organization. This is what is called ESG compliance monitoring.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

The article is an effort of the Marketing function of Magistral Consulting. For any business inquiries, you could reach out to prabahsh.choudhary@magistralconsulting.com

 

Introduction

Markets are overheated. Funds are being launched. Series A has now touched $50 million to start with for even pre-revenue start-ups!! In these frenzied times, the experts of fundraising are in demand. Magistral’s fundraising support services could be used at a fraction of the fund, to close the fund faster and in full.

Magistral Fundraising Support Services

Magistral fundraising support services help clients reach out to Limited Partners, General Partners, Asset Managers, and Business Decision-makers for business development support.

Investors Reach-out for Fund Raising

Types of Investors Reach-out for Fundraising or business

Limited Partners Reach-out

In this, the Magistral team generates the leads for Limited Partners, i.e., Family Offices, Sovereign wealth funds, pension funds, Treasury offices, Universities, etc. This list is then used to set up meetings with our clients who are General Partners like Venture Capital, Private Equity funds, or for service providers like Investment Banks and brokers.

Each lead comprises the name of the individual, their email IDs, firms’ names, links to their profile, their investment expertise, past investments, office address, websites, and board phone number. This information is then used to set up meetings with the client. Once the meeting is set up, Magistral gets out of the way for both parties to negotiate once the meeting is set-up

Once the reach-out for investment in a specific fund is done, further steps like CRM updation, design, and distribution of newsletters are devised to keep the leads warm

 

General Partners Reach-out

In this scenario, we are hired by Startups and established firms to raise funds from Private Equity or Venture Capital firms. Here the leads are generated for the PE or VC firms that specialize in the given industry. We reach out to investors specializing in SaaS, Healthcare, Tech, and several other industries all the time. The leads carry information like the name of the individual, email IDs, phone numbers, websites, investment specialization, past investments, etc. These leads are used to set up meetings with our clients. There is an efficient online tracker to see the status of each lead and where they are in the fundraising journey like the first meeting, second meeting, NDA signed, LOI signed, etc. The tracker also records the meeting notes and next steps

Reach out for B2B Business Development Support

If investors like Private Equity, Venture Capital, or Family Offices have B2B companies in their portfolio, and they have a board seat or get involved in active management of the firm, it’s imperative to focus on business development. Business development bumps up the revenue and enhances valuation. Magistral has been of help to investors in these situations too. We generate B2B leads in specialist industries. We also go a step further and try to set up the meetings for the business development teams. The support is also offered in design-related services like brochures, introductory materials, and presentations, etc.

Asset Managers’ Reach out

This forms the backbone of our operational support services to LPs like Family Offices or Fund of Funds, and Investment Banks that specialize in managing clients’ money. Here the reach-out is done primarily to collect all the documents for effective due diligence on the performance of funds. So specialized asset managers are reached out, all their performance documents are collected and then analyzed on metrics of risks, returns, volatility, etc. to arrive at a set of recommendations for the client.

Magistral’s Investors’ Database

At the heart of our fundraising efforts is our proprietary database of investors. We hit our database as a first step to raising funds. This database has been prepared and updated with the information that we have acquired from years of experience in fundraising for GPs, start-ups, and other firms. It has currently 25,000 + leads of General Partners and Limited Partners based out of the US, the UK, Europe, and India. This is also offered as a separate product to clients who are interested in fundraising at very competitive prices.

Rather than carrying a plethora of information on investors, most of which is anyway useless, Magistral’s database carries only the information that is useful for fundraising. That information is the leads of investors, their interests, their investments, and how to reach out to them. We keep it that way so that we could provide to our clients, what they need at an affordable pricing point

Here is the demo of our database.

Magistral’s Fundraising Package

Magistral can play a critical role in all stages of fund-raising. It offers its services as a package.

Magistral's Fundraising Package

Elements of Magistral’s Fundraising Package

These services are

1. Fundraising Documentation: Whether you are a GP, a start-up, or an established firm looking to raise money, the first step is to finalize the documentation. These are the standard three documents which are Pitch Deck or PPM/CIM, Valuation, and 1 pager teaser. We prepare these documents at a lump sum fixed cost, with all the iterations taken into account. The service also includes polishing of the material, to make sure it is brand consistent and meets the global standards of marketing and design

2. Magistral’s Investor Database: Once the documentation is done, the next step is to reach out to investors and start setting up the meetings. Magistral’s investors’ database is the tool designed for this step. You could get the investors’ coordinates and write to them directly. If you can choose investors from all across the industries and geographies from its record of 25k+ investors. In case you still think you are super-specialized and would need far more niche investors, a customized lead generation of 500+ leads are also offered as a top-up

3. Specialized lead generation: For certain occasions like B2B business development, a specialized lead generation campaign is taken up

4. Analyst Support: For reaching out to investors, or for documentation or for attending meetings, taking notes, and taking care of the next steps from meetings, if you need any analyst support, that could be offered as well, which provides a flexible and cost-effective option to hiring onsite.

Magistral is Not a Broker-Dealer

Whenever we present ourselves as fundraising experts, we get inundated with broker-based assignments. There are several reasons we don’t get into commission-based variable arrangements. These are

1. The upfront investment of efforts: There is an upfront investment of efforts on our part for every assignment that we take up. This is either in the form of understanding the opportunity, refining the documentation to suit the need of investors or simply reaching out to investors. We can’t support any opportunity and put upfront investment specifically in the case where there has been no working history

2. Impartiality of our recommendations: We work with both GPs and LPs. We don’t want to take any opportunity to our GP and LP clients, where we have commercial interests in the form of brokerage fees. We pride ourselves in presenting the best opportunities that are carefully evaluated for fitments and returns for our clients. That is only possible if we analyze the opportunity impartially without any commercial interest.

3. Brokerage Fees: We are paid to bring in the money. Wonderful!! But who pays this money? This is one of our clients, who loses 1-5% of the investment right from the go!! We don’t think that goes well with our values.

4. Too many unreliable players: A brokerage-based arrangement could be offered by anyone in the market. They have no skin in the game. They are just evaluating the options out there. We don’t want to get involved in any deal with any asset manager that has no previous track record and is unreliable. If you yourself are not ready to invest a few thousand dollars in your idea, how do you want us, to get you millions?

5. Magistral is not in a position to negotiate: The legal responsibility and the negotiation is dependent on the parties involved. Magistral is just a service provider. Even if we do our best to get you, investors, there is no safety mechanism for us in case you start putting up conditions that spoil the deal. All our efforts are wasted and we would have lost the trust of another valued client

6. Lack of licenses: We don’t have any broker-dealer licenses and we don’t want to get into that business

 

All our services are retainer-based and after a successful round of fundraising, the fees work out to be a very minuscule part of the fund. We will not sign any success-based fee arrangement with a client, we have no working history with.

 

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

 

 

Introduction

Multi-Family Offices are specialist wealth managers who invest on behalf of their clients that are usually family offices. Due to multiple macro changes in the global economy, the pandemic, in particular, now MFOs are toying with the idea of outsourcing. Multi-Family Office Outsourcing for Operations in itself is an area that is still evolving. The scope of outsourcing is being broadened after the pandemic to save costs and improve the operational quality and reliability

In the article, we talk about the scope of outsourcing possible, without bringing down the quality of your engagement with your clients. We will also talk about the risks of the outsourcing process and how Magistral takes care of it.

Multi-Family Office Outsourcing- What could be outsourced?

There is nothing like “safe” or “unsafe” outsourcing. The scope of outsourcing depends on the capability of the vendor, repeatability, and replicability of the client processes, and the relationship and trust between the vendor and the client. Trust-building is a slow process with incremental value addition from vendors with reliable performance over a while.

Multi Family Office Outsourcing Activities

Type of jobs that could be outsourced by MFOs

Still, the things that could be outsourced to different extents are following:

Investment Analysis

A major part of the Investment Analysis that is done by Multi-Family Offices could potentially be outsourced. Major ones being:

1. Fund Analysis: If you are investing in a hedge fund specifically long-short equity, that requires regular evaluation, then outsourcing may present a viable opportunity. The experienced vendor has set templates to benchmark a fund with global indices and coming up with all the performance indicators related to Risk, Volatility, Returns, Sharpe Ratio, Sortino Ratio, and a host of other commonly used indicators for the fund evaluation

2. Direct Investments: MFOs do invest directly in companies that they are convinced have a promising future. In this case, outsourcing could help you with Financial Modelling, Due Diligence, and preparation of Investment Memorandums and Pitch Deck

3. Financial Modelling: Financial Modelling, not only related to valuations of the companies that an MFO wants to invest in, but also Real Estate, Sum of Parts Analysis, M&A Analysis, Comps, and several other models are templatized with the vendor and since its being done for other clients too, it could be produced efficiently in terms of costs and time and with reliable quality

4. Private Equity and VC Funds’ Due Diligence: Magistral evaluates multiple PE and VC funds for investments by Single or Multi-Family Offices. We look for the track record of Founders and Partners, their portfolio, unicorns, exits, industry focus, geographic focus, and the reliability of expected returns that the funds promise

5. Fundamental Analysis of Stocks: Equity Analysis is a standard feature that many outsourcing vendors offer. It is analyzing the stocks’ capability to generate positive returns in the future

6. Crypto and Crypto-based Funds: Crypto has grown at an outstanding pace. FOMO is leading to all Family Offices adding this to their portfolio either as direct investments or in the form of a crypto-based fund. Magistral provides the financial model and due diligence for specialized investments like Cryptocurrencies and blockchain-based products and companies

7. Real Estate: Magistral also supports Family offices that specialize in Real Estate investments through services like valuations, comps, tracking and analyzing ETFs, preparing Pitch Decks and PPMs.

Investment Analysis for each client is unique and sometimes complicated. Magistral has helped 30+ family offices in outsourcing their investment analysis process and is well versed with all the operational areas that could be effectively outsourced.

Marketing and Investor Relations

The marketing and Investor Relations processes at multifamily offices are usually repeatable and templatized. These processes along with the research that goes into them, are obvious candidates for outsourcing. The following activities could potentially be outsourced without much loss in terms of quality or time and make for ideal candidates of Multi-Family Outsourcing candidates

1. Newsletters: Newsletters are a common occurrence in the Marketing functions of Multi-Family Offices. These are usually outsourced anyway if they are not too niche or specific

2. Reports: Industry Reports, Geography Reports, or other PoV materials that are prepared in marketing to further the investment thesis and differentiation is better done outsourced

3. MIS: MISs for internal stakeholders and investors are outsourced. These are usually delivered in Excel with or without Macros, PowerPoint, PDFs, and word. Sometimes data is pulled from specific databases like Pitchbook or tools like Addepar to prepare these reports

4. CRM: Management of the whole CRM systems for leads updation, investor reach out and content development is something that is better done outsourced

5. Research: Research is required to fine-tune the investments’ pitch and to prepare the reports. If reports need to carry a knack that’s very specific to a firm and can’t be outsourced, the research for the same is the next viable candidate

6. Portfolio Reporting: Portfolio and its valuations are reported sometimes as frequently as weekly and most of the time monthly. The whole process of preparing the valuation for different instruments in the portfolio like Hedge Funds, Direct Investments, PE and VC Funds, Real Estate, and other specialized investments is first understood by an experienced vendor and then gradually shifted offshore.

Operations

What comprises operations is different for different firms. Mostly lots of data-heavy lifting related to portfolio forms the bulk of operations. Depending on how it is defined, there are multiple activities that could be outsourced. In the Multi-Family office outsourcing scheme of things, these activities take the most time to outsource effectively

These are:

1. Data Collection and Automation: In a heavily invested Multi-Family Office, data is flowing related to multiple direct and fund-based investments. This data needs to be captured and analyzed. Sometimes there are specific strategic initiatives that are proprietary and need data analytics and research like coming up with future successful investments by analyzing the past ones. These initiatives have a good potential for outsourcing. In the past, Magistral has helped its clients automate the data collection process, preparation of reports, and data visualization on tools like Power BI and Tableau

2. Data Updation: Depending on the platform that a firm uses for capturing the data, the data needs to be collected and recorded for analysis and reporting. Sometimes it’s automated tools like Addepar and sometimes it’s just a host of excel sheets talking or not talking to each other. Irrespective of the platform, data needs updation regularly and that is something better outsourced for cost and time efficiencies

3. Data Analysis: Putting all the data collected or recorded through formulas and making sense out of it is the analysis part. Analysis shows whether an investment is right and whether the portfolio is on the expected track to make returns. Data analysis depending on whether there are set templates and their repeatability could be easily outsourced.

Risks associated with outsourcing

Everything is not hunky-dory when it comes to outsourcing MFO operations. There are multiple risks that clients face while outsourcing. These are:

1. Not enough savings: Global firms that offer outsourcing at scale are more reliable than small or medium-sized outsourcing players, but their price quotations come very close to the onsite hiring and there are not enough savings to warrant the risk.

2. Attrition in the FTE model: Most outsourcing companies operate on an FTE-based model, where you hire offshore a virtual employee to save costs. The client puts in time and efforts to train a particular resource, just to realize that the employee decides to leave to pursue a career elsewhere, taking with him months of efforts

3. Lack of skills: There are many outsourcing vendors out there in the market but there are very few who understand the multifamily office business and its challenges. It will be difficult to scale your outsourcing with such vendors

4. Operations disruption: While outsourcing, if the whole step backfires, there may be irreparable damage to the operational continuity and the firm’s reputation.

Magistral counters all these risks with its well-laid out Multi-family office outsourcing process with proper checks and balances. This process has been tested out with more than 30 Single and Multi-Family Offices across the globe.

 

Magistral’s Proprietary Process of Multi-Family Office Outsourcing

Multi-Family Office Outsourcing at Magistral is a 4 step process that minimizes the vendor performance risk for the clients. Here are the details

Magistral's Outsourcing Process

Magistral’s Outsourcing Process counters all the traditional drawbacks of outsourcing

Pilot process

Before deciding on whether the whole process needs to move offshore, the client starts with a small pilot project. We are also not in a hurry to push the big-ticket purchase, it’s because we are confident that clients will eventually find value in our performance and stick with us. So a Pilot project starts, quotes of which are very competitive as it’s quoted on “No profit-No loss” basis by us. The client gives us a small project and tests the various aspects of offshoring firsthand. These aspects are quality, communication, engagement, connection, technical expertise, billing, and other softer aspects of the engagement.

Proposal and Engagement Model

Once the pilot is successful, the client journey moves to decide on the overall broad contours of the engagement. Magistral submits a proposal with commercials, project plans, CVs of resources, the scope of work, methodology, etc. Once that gets signed the wheels finally start to roll. The engagement models offered by Magistral suit multi-billion dollar asset managers as much as it does to a one partner company.

Standard Operating Procedure

Magistral after the signing of Proposal or Letter of Intent gets down to the knowledge transfer process. It comprises detailed interviews with client stakeholders. All the information received from clients’ stakeholders is put in a standard document called SOP. SOP is helpful while training a new team. It’s equally helpful while a team member leaves and a new one joins for a quick knowledge transfer. It is updated regularly and is the bible of all the operational details and know-how.

Knowledge Transfer, Project Stabilization and SLA Reporting

Once the project goes live, it doesn’t do so in a big bang, all once at a time way. Workstreams are offshored gradually. Easier, repeatable processes are offshored first, before the complicated ones requiring complicated decision making. Once the team is stable, we start reporting MIS that carries our Service Level Agreements compliance. A few examples of our SLAs, 100% adherence to the promised timelines, more than 95% availability of the analysts, and several others depending on the scope of the project.

 

Magistral is a specialist when it comes to Multi-Family Office outsourcing, across the globe in outsourcing various aspects of their operations. Its costs are competitive as it’s small enough not to have overheads that don’t add any value to clients and still big enough to have the capability of servicing a global MFO well. To schedule a conversation with a Magistral representative drop in a line here

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

 

 

 

Introduction

The business of Venture Capital funds depends on the targets it invests in. The more the chances of its portfolio companies hitting a moonshot, the more successful the fund is in general. Venture Capital Due Diligence is a process that ensures the appropriate targets are locked in at the seed or early stage to ensure 50-1000X returns in a 5 to 10-year horizon.

The way a VC fund looks at a target is fundamentally different from how a Private Equity or a lender would look at it. A VC fund looks for that one silver lining that can make a portfolio company a roaring success. PE firms mostly weigh pros and cons and generally invest if the Pros outweigh the cons. A lender analyzes if anything at all could go wrong with the company and may jeopardize its investments. Different objectives of investment require different lenses for analysis.

Challenges regarding Venture Capital Due Diligence

VC firms invest in small firms, primarily start-ups, often only at the idea stage. The biggest challenge for due diligence, in this case, is the availability of data. When the idea has not shown any traction, the research needs to be more outside-in. That is finding out the market information and if any customers may be willing to pay for such services of the potential portfolio company. If there is any traction, then the analysis needs to be both outside-in and inside-out. An inside-out investigation is more towards getting into the details related to the operations and finance of the company along with the opportunity that the market offers.

Another challenge is to keep the deal pipeline active for multiple due diligence exercises to happen. Due diligence can throw numerous red flags. If there are various deals in the pipeline, a VC fund can walk away from the opportunity till they get into the company that justifies investment in terms of money and time. Many VC funds park small amounts with the companies they know or are from their circle of friends and family. That biased approach would result in sub-optimal results in the long run. Deals found from networks or events are usually the hot deals that others are also evaluating. That leads to FOMO (Fear of Missing Out) on the part of VCs and hence the overvalued assets.

Advantages of Outsourcing Venture Capital Due Diligence

The advantages the outsourcing brings are numerous like it saves costs, resources are available on-demand and there is a certain specialization with the vendor who works with multiple VC firms, which raises your own investing game.

However, when it comes to outsourcing, there is always a lingering threat in the minds of asset managers. Will the quality be any good? Or what if the deal gets outed due to many individuals knowing about it? Or do they even understand it, ours is anyway a specialized investing or a niche industry?

Challenges around Venture Capital Due Diligence Outsourcing

It is easy to make a business case for outsourcing on an excel sheet, where it can produce 30-70% cost savings while in most cases improving the quality of due diligence. However, concluding everything is hunky-dory with outsourcing is far-fetched. Here are the top challenges with outsourcing venture capital due diligence

There are way too many generalist research and outsourcing players out there, who offer to do research, list generation, and make company profiles, but most of them lack a deep understanding of how VC investing works. There are very few specialist VC research players. Magistral is one of them

VC itself is a new and upcoming industry. In the US alone in the first 8 months of 2021, the number of unicorns created has crossed the number of unicorns ever created in the history of VC investing. That is the acceleration. Though outsourcing provides the access to talent that can deliver, you can be assured the talent itself is half baked, purely due to the massive acceleration that this industry is witnessing

Even the outsourcing home country is witnessing the talent crunch. For example, India itself lacks VC talent and there is a huge demand for trained resources. In a typical FTE-based outsourcing model, it is very possible that you train someone offshore in your diligence processes and he is poached by the competition, leading you to train offsite resources again and again and again. It’s a massive headache

VC investing is more of an art than an exact science and some of the DNA of VC investing is very difficult to outsource.

Magistral’s proprietary process aims to do away with the shortcomings related to Venture Capital due diligence research outsourcing.

Before we dive into the Magistral’s process, here is how we evaluate targets. The things that we analyze closely to ensure the target you invest in has the best chance of becoming your next moonshot and increasing the profile of your fund

Magistral Consulting VC Due Diligence Outsourcing Process

Magistral’s Process to Outsource Venture Capital Due Diligence

Venture Capital Due Diligence: Key Components

Venture capital due diligence involves looking specifically around the following aspects of a potential portfolio company before committing to investing:

The opportunity size

Assessing the opportunity size carefully gives an idea of whether there is a possibility of a moonshot with the investment. If the total addressable market (TAM) runs into billions and the company solves an acute pain or saves cost or saves time, or makes the process easier, then there is a massive chance that the company will scale up faster. Sometimes the addressable market is at the conjunction of two or more big markets, and there the TAM needs to be arrived at, with careful triangulation and estimates. Calculation of TAM carefully gives an idea of the upside possible if the strategy and team are right.

Strategy

The opportunity size almost always coincides with the Go to Market (GTM) strategy. This is where lots of VCs add value with their network and connections along with the domain experience. The company suggests a GTM, which experts in the due diligence phase verify. A well-presented GTM has level 2 and level 3 steps, along with the timelines and business outcomes. There is also the requirement of funds laid out clearly for every stage.

The size of the opportunity and how the company plans to seize that opportunity is almost a make-or-break part of the due diligence process.

Competition

Competition sometimes is assuring and occasionally threatening. Competitive intelligence in itself throws light on multiple possibilities. If it’s a product or service promised to be one of its kind, it will be challenging to find an exact competition. The task is not to find the competition per se but carefully checking if the market makes sense, to begin with. Is it just too tricky a market to crack, or is there no market at all, or it’s a service or product no one wants to pay for? Competition or absence of it here is a great pointer. In moderately accepted business models, the company is expected to face competition, big or small. The competition is studied for traction. If all the competition out there is growing at a healthy pace, it shows that the industry may have a place for someone who could do the job better. If competition is shutting shops or taking too long to be profitable, then also it’s a pointer towards the choppy waters ahead.

This also needs to be seen in the light whether the target can be number 1 or 2 in a vast market as it all works on the “winner takes it all” philosophy with VC investing

In any scenario, a careful evaluation of the competition throws a guiding light and is an essential step in the due diligence process

ESG

ESG has picked up in the recent past and for a reason. ESG stands for Environmental, Social, and Governance aspects of an investment that indicates sustainable investing. Though it’s far more critical towards the later stage funding rounds, planning yields rewards in the earlier rounds too. It is estimated that the majority of the deals in the future will be impact or sustainable investments, which will fulfill the criteria of ESG maturity. Some studies show almost all investments would be impact investments a few decades down the line. A VC not only plans for an exit from the portfolio but to raise following funding rounds too. Chances of raising rounds at higher valuation increase if the company is primed to be an ESG investment right from the seed or early-stage rounds.

Financials

If the company has been around for a few years and has seen some traction, financial analysis becomes crucial as any other factor in the due diligence process. Financials feed into the valuation of the company. Financials are also essential to forecast future revenues, profitability, and cash flows. In the due diligence process, reasonable estimates are made to project the company’s financial statements for the next five years. That drives the valuation of the company on which the funds are to be raised. In the due diligence process, sometimes, the assumptions made during the preparation of financial models are tested thoroughly. If there is an assumption that may not stand the scrutiny of the financial analyst, it is flagged. If there is a massive impact of an erroneous assumption, this exercise alone could save millions of dollars for the VC investor.

The team

The founding team in a smaller company is the driving force. Suppose the team is experienced, has relevant skills, produced returns for investors in the past, and is motivated to make a difference. In that case, it can be the difference between an investment that reaches out for a moonshot and another one that proves to be a dud. Checking the team’s credentials, experience, qualifications, and connections is an essential aspect of the due diligence process.

Red Flags

Apart from significant aspects discussed earlier, the due diligence team also looks for red flags in the documents submitted by the company seeking investment. It could either be a legal hurdle, financial irregularities, or any other problems with the documentation. Discussing these red flags with the company may well turn out to be fruitful.

Magistral’s proprietary process for Venture Capital Due Diligence

Magistral's Advantages for VC Due Diligence Outsourcing

Magistral’s unmatched advantages in VC Due Diligence

Magistral works with multiple VC firms, some one-man companies, and others running a portfolio of hundreds of companies or start-ups with a few unicorns and soonicorns. After performing hundreds of due diligence exercises across industries like SaaS, healthcare, Tech, Industrials, Services, Real Estate, and others, Magistral has developed a proprietary due diligence service delivery method that counters almost all the drawbacks of outsourcing.

Magistral’s financial analysts take control of the data room. The VC or the company populates all the documents in the data room. We comb through the records with an eagle eye to spot opportunities or red flags. We have developed a standardized checklist to evaluate all types of documents. All our observations and questions are collected by the VC and discussed with the company. We also prepare a detailed report on the business. The information on the company comes from secondary research, discussions with the industry experts, and our in-house expertise in the area. Finally, Investment Memo or pitch deck crystallizes all the insights. These pitch decks are designed consistently with the global marketing standards of the financial industry.

All FTE-based engagements of Magistral have an ever-evolving Standard Operating Procedure (SOP) document. This helps in standardizing the process irrespective of the personal capability of the analyst working on the project. It also ensures a smooth transitioning in case the trained analyst leaves. There is also a shadow analyst always ready to take on in case the analyst leaves permanently or takes off or holidays. It’s so much like the cockpit of Boeing 747, planned for all eventualities.

Our experience has made us more knowledgeable about VC investing than some of our clients. That helps our clients improve their investing game too. Templates, Systems, and our experience and DNA of VC investing ensure due diligence that meets the global standards of investing at competitive valuations. If it sounds interesting, for a conversation with, drop an inquiry here

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

 

 

 

 

Introduction

The business of Venture Capital funds depends on the targets it invests in. The more the chances of its portfolio companies hitting a moonshot, the more successful the fund is in general. Venture Capital Due Diligence is a process that ensures the appropriate targets are locked in at the seed stage to ensure 50-1000X returns in a 5 to 10-year horizon.

The way a VC fund looks at a target is fundamentally different from how a Private Equity or a lender would look at it. A VC fund looks for that one silver lining that can make a portfolio company a roaring success. PE firms mostly weigh pros and cons and generally invest if the Pros outweigh the cons. A lender analyzes if anything could go wrong with the company and may jeopardize its investments. Different objectives of investment require different lenses for analysis.

Challenges impacting Venture Capital Due Diligence

Venture Capital invests in small firms, primarily start-ups, often only at the idea stage. The biggest challenge for due diligence, in this case, is the availability of data. When the idea has not shown any traction, the research needs to be more outside-in. That is finding out the market information and if any customers may be willing to pay for such services of the potential portfolio company. If there is any traction, then the analysis needs to be both outside-in and inside-out. An inside-out investigation is more towards getting into the details related to operations and finance of the company along with the opportunity that the market offers.

Another challenge is to keep the deal pipeline active for multiple due diligence exercises to happen. Due diligence can throw numerous red flags. If there are various deals in the pipeline, a VC fund can walk away from the opportunity till they get into the company that justifies investment in terms of money and time. Many VC funds park small amounts with the companies they know or are from their circle of friends and family. That biased approach would result in sub-optimal results in the long run

Venture Capital Due Diligence- What to look for?

Venture capital due diligence involves looking specifically around the following aspects of a potential portfolio company before committing to investing:

VC Due Diligence

Questions that the VC Due Diligence answers

The Opportunity Size

Assessing the opportunity size carefully gives an idea of whether there is a possibility of a moonshot with the investment. If the total addressable market (TAM) runs into billions and the company solves an acute pain or saves cost or saves time, or makes the process easier, then there is a massive chance that the company will scale up faster. Sometimes the addressable market is at the conjunction of two or more big markets, and there the TAM needs to be arrived at, with careful triangulation and estimates.

The opportunity size almost always coincides with the Go to Market (GTM) strategy. This is where lots of VCs add value with their network and connections along with the domain experience. The company suggests a GTM, which experts in the due diligence phase verify. A well-presented GTM has level 2 and level 3 steps, along with the timelines and business outcomes. There is also the requirement of funds laid out clearly for every stage.

The size of the opportunity and how the company plans to seize that opportunity is almost a make or break part of the due diligence process.

Competition

Competition sometimes is assuring and occasionally threatening. Competitive intelligence in itself throws light on multiple possibilities. If it’s a product or service promised to be one of its kind, it will be challenging to find an exact competition. The task is not to find the competition per se but carefully checking if the market makes sense, to begin with. Is it just too tricky a market to crack, or is there no market at all, or it’s a service or product no one wants to pay for? Competition or absence of it here is a great pointer. In moderately accepted business models, the company is expected to face competition, big or small. The competition is studied for traction. If all the competition out there is growing at a healthy pace, it shows that the industry may have a place for someone who could do the job better. If competition is shutting shops or taking too long to be profitable or raising further rounds, then also it’s a pointer towards the choppy waters ahead.

In any scenario, a careful evaluation of the competition throws a guiding light and is an essential step in the due diligence process

ESG

ESG has picked up in the recent past and for a reason. ESG stands for Environmental, Social, and Governance aspects of an investment that indicates sustainable investing. Though it’s far more critical towards the later stage funding rounds, planning definitely yields rewards in the earlier rounds. It is estimated that the majority of the deals in the future will be the impact or sustainable investments, which will fulfill the criteria of ESG maturity. Some studies show almost all investments would be impact investments a few decades down the line. A VC not only plans for an exit from the portfolio but to raise following funding rounds too. Chances of raising rounds at higher valuation increases if the company is primed to be an ESG investment right from the seed or early-stage rounds.

Financials

If the company has been around for a few years and has seen some traction, financial analysis becomes crucial as any other factor in the due diligence process. Financials feed into the valuation of the company. Financials are also essential to forecast future revenues, profitability, and cash flows. In the due diligence process, reasonable estimates are made to project the company’s financial statements for the next five years. That drives the valuation of the company on which the funds are to be raised. In the due diligence process, sometimes, the assumptions made during the preparation of financial models are tested thoroughly. If there is an assumption that may not stand the scrutiny of the financial analyst, it is flagged. If there is a massive impact of an erroneous assumption, this exercise alone could save millions of dollars for the VC investor.

The team

The founding team in a smaller company is the driving force. Suppose the team is experienced, has relevant skills, produced returns for investors in the past, and is motivated to make a difference. In that case, it can be the difference between an investment that reaches out for a moonshot and another one that proves to be a dud. Checking the team’s credentials, experience, qualifications, and connections is an essential aspect of due diligence.

Red Flags

Apart from significant aspects discussed earlier, the due diligence team also looks for red flags in the documents submitted by the company seeking investment. It could either be a legal hurdle, financial irregularities, or any other problems with the documentation. Discussing these red flags with the company may well turn out to be fruitful.

Magistral’s proprietary process for Venture Capital Due Diligence

Magistral works with multiple VC firms, some one-man companies, and others running a portfolio of hundreds of companies or start-ups. After performing hundreds of due diligence exercises across industries like SaaS, healthcare, Tech, Industrials, Services, Real Estate, and others, Magistral has developed a proprietary due diligence service delivery method.

Magistral's Due Diligence Process

Magistral’s Due Diligence Process

As a first step, Magistral’s financial analysts take control of the data room. The VC or the company populates all the documents in the data room. We comb through the records with an eagle eye to spot opportunities or red flags. We have developed a standardized checklist to evaluate all types of documents. All our observations and questions are collected by the VC and discussed with the company. We also prepare a detailed report on the business. The information on the company comes from secondary research, discussions with the industry experts, and our in-house expertise in the area. Finally, Investment Memo or pitch deck crystallizes all the insights. These pitch decks are designed consistently with the global marketing standards of the financial industry.

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

Introduction

Private Equity (PE) consulting has been around for a while. Many consulting firms have practices offering private equity consulting services. It is interesting to note that even global consulting firms rely on offshoring to a great extent to deliver value to private equity clients on their most pressing issues. Offshoring reduces costs of consulting firms and some of it must be passed onto the clients (we hope!!). But what if all the advantages of offshoring could be passed onto the clients directly?

Read further to know more!!

Private Equity Consulting and Offshoring: Why it’s a match made in heaven?

Management Consulting as an industry has been around for more than 100 years on the back of its solid value proposition for clients. It brings in expertise, experience, political leverage, data sources, network, and usually signs business outcome-based projects with the clients. Usually, benefits outweigh the costs by 3X to 10X.

Private Equity Consulting and Offshoring

Private Equity Consulting and Offshoring brought together

Offshoring also picked up with the advent of the internet. As the work was possible with the help of the internet and advanced communication options, offshoring started to make sense for low-end jobs like call centers and data entry. It was followed by IT and now it is the turn of high-end research, analytics, and consulting jobs. The value proposition of offshoring is cost efficiency and scale. In most cases, offshoring also results in improvements in terms of quality and delivery apart from cost-cutting.

When we combine the forces, we have the impact of consulting with the cost advantages of offshoring, making it an unbeatable value proposition for clients in their marketplace. Management consulting overheads like weekly flights for consultants, high-end hotels for stay, and highly-priced consultants, all of which are paid by the clients are reduced by remote working and service delivery. At the same time, task offshoring to a group with all the expertise in a given industry brings a scale that can be taken advantage of, by smaller clients.

Business Outcomes for Private Equity Industry and the Services Offered

Major work streams at all private equity companies, big or small, comprise of following workstreams:

Fundraising and marketing or investor relations

Deal origination

Deal execution along with due diligence; and 

Portfolio management to get into the operational details of portfolio companies to make it more valuable

Private Equity Consulting Business Outcomes

Private Equity Consulting Business Outcomes

Magistral's Service Offerings for Private Equity

Magistral’s service offerings for Private Equity

Here is how Private Equity consulting helps in these workstreams

Fund Raising and Marketing/ Investor Relations

A fund is established when it has a healthy pipeline of potential investors apart from the existing ones. This is the area where most emerging managers struggle. The game does not even start if the firm is not able to raise the angel fund. However, like everything else in life, robust results need time and consistent efforts. PE consulting helps reach out to the investors and maintain a continuous touch-point to drive home the value proposition of the fund and thus enable successful fundraising rounds.

 

The services that help in fundraising are

Fundraising documentation

Fundraising requires a lot of documentation. Sometimes it could be enormous for an emerging manager. At the same time, it needs to be streamlined for established managers. Magistral helps prepare documents like Private Placement Memorandums (PPMs)/ Confidential Information Memorandums (CIMs), pitch decks, financial models and projections, teasers, and strategy and marketing documentation.

Investor profiling and reach-out

Funds specializing in different areas have different ideal profiles for investors or limited partners. Magistral helps in profiling and reach out to these investors. Magistral also has an in-house database that carries leads of more than 15000+ Limited Partners (LPs) and General Partners (GPs). It can also access databases of other players if the task needs it.

Design and Data Support

Magistral has an in-house design team that streamlines the PowerPoint designs and makes them consistent with the global marketing standards. It’s like we receive the content in raw form, sometimes scribbles from a notepad or whiteboard, and the output is a well-designed PowerPoint that could directly be sent to investors. Similarly, pitch decks and PPMs could also be designed to look more powerful visually. Likewise, data could be streamlined related to investors or CRM systems that the clients use.

Newsletters

Multiple touch-points with investors mark content like Newsletters, PoV documents, Industry reports, and market research. Magistral has experience working with hundreds of clients working on these assignments. It has access to resources like secondary sources, interviews with the panel of experts, and triangulations to come up with market sizes, etc. Worthy content establishes the authority of the Private Equity fund in the eyes of accredited investors.

Sustainable Investment and Impact Assessment

We have a specific service offering around ESG analysis, sustainable investments, and impact assessments of the current or potential assets acquired by the Private Equity firms.

Deal Origination

Deal origination services make sure that the focus of the GP is on the suitable targets and populate the deal pipeline with more appropriate deals, to be taken up as and when required. Picking up the right deals is the lifeblood of PE operations. It’s by picking up the right deals that a GP can offer superlative returns to its LP investors. Magistral helps with Deal Flow support and Inbound deal flow analysis.

The deal origination related services offered are:

Industry tracking and landscaping

A Private Equity firm needs to scan the environment for investing continually. It needs to track its key markets, geographies, and industry regularly to take advantage of emerging trends. Magistral has helped multiple clients in tracking industries like healthcare, SaaS, blockchain, cybersecurity, heavy engineering, and many others.

Potential target identification

A list of suitable potential targets is generated using secondary and primary sources. As per the investment thesis, the targets satisfy a host of customizable criteria like revenue, profits, employees, industry, geography, and being open for investments. Secondary sources include databases, whereas primary sources are industry associations, accelerators, angel investor groups, etc.

Target company profiling

Once the list is generated for potential targets, the next step is to shortlist the companies of interest and go for a deeper dive.  A target company is profiled for its business details, strategy, latest developments, management, SWOT, Porter’s 5 forces, and other customized information. Understanding the openness of the company for an investor on the board is also studied at this stage.

Target pipeline management

For deals to be continuously happening, the pipeline needs to be populated continuously. There should be deals in all stages of deal-making. That is ensured by filling the targets in the funnel on an ongoing basis.

ESG Analysis

ESG or impact analysis is more critical than it was ever before. It’s imperative then that Private Equity firms evaluate the deals for ESG fitments. A company that performs better on ESG frameworks is a more sustainable investment and makes a far-reaching impact on the society and communities it serves.

Inbound deal flow management

If a firm receives lots of inbound inquiries, there needs to be an agency to sort out the worthy opportunities from the non-serious ones. Magistral matches the opportunities with the GPs investment thesis and brings forward the best deals.

Summarizing and preparing IMs:

If start-ups send IMs, the same need to be summarized for discussion with the investment committee. Magistral summarizes the Investment memos into investcomms decks for quick and effective decision making.

Deal Viability Analysis: This involves getting into the nitty-gritty of a deal, identifying red flags both inside out and outside in, to make sure the deal produces the impact, which is the aim of the investment to start with. This is achieved from the exhaustive and comprehensive market and company research.

Deal Execution and Due Diligence

Deal execution and due diligence ensure the right investment decisions to produce significant returns, identifying risks for better planning post-investment or M&A.

Here the services are about providing all the foresight and intelligence to make the right decisions. The primary service offerings here are:

Target company due diligence

Here, Magistral takes access to the data rooms and analyses the information to produce highly relevant deliverables and insights. Due diligence includes financial, operational, and ESG related aspects of a firm. Magistral works with both Private Equity firms and Investee companies. It prepares Due Diligence Questionnaires (DDQs) and collects information from the investee companies, either directly or indirectly.

Industry Research

Here, industry research is more specific and has to do with the target company’s operations. The industry in which the target operates and details like trends, SWOT, Porter’s five forces, key competition, pricing trends, news. etc. are captured to provide a holistic view about the industry in which the target company operates

Detailed company profiling and competitive intelligence

In this stage of the company profile, details are captured from multiple sources like ex-employees, management, existing employees, vendors, competition, investors, and industry stakeholders. Also, information related to competition and their strategy is captured using primary and secondary sources.

Investment Memorandums

If the investment needs to be made with other co-investors, standard documentation is applicable like Investment Memorandum, Confidential Information memorandum, Pitch Deck, and Financial Models.

Modeling and Valuations

This exercise ensures that deal is made at the right prices so that there is a significant upside for the investment returns. Magistral has prepared 100+ financial models for valuations in industries like SaaS, tech, healthcare, IT, manufacturing, B2C retail, fashion, chemicals, and e-commerce. Here the information and assumptions required to prepare a financial model are captured from detailed discussions with the client. The models in which Magistral has expertise include and are not limited to 3 parts financial models, LBO analysis, DCF modeling, Real Estate modeling, precedent transaction analysis, comparable analysis, and impact analysis.

Portfolio Management and Fund Management

Portfolio Management aims at maximizing the value of the investment in a company by a Private Equity firm. This is achieved by supporting various tasks of the acquired company to reach more customers, hence improving revenue or reducing operations’ costs. Fund Management is about streamlining the functions of the fund itself to focus on the core tasks of investing and fundraising.

Here the services are:

ESG Compliance Monitoring

Magistral, after assessing the ESG maturity of an investee company, suggests a set of metrics monitored periodically after the investment is made. The data is collected on these metrics and reported to the board and management along with investors every quarter.

Outsourced CFO

Outsourced CFO services are relevant for both funds and the portfolio companies, specifically in the cases where the PE firm invests in start-ups or smaller firms. These companies may not be in a position to invest in a full-time CFO and thus may go for an outsourced CFO that is fractional and provides the operational and cost flexibility. Sometimes Financial Process and Accounting could be outsourced, while CFO could be kept in-house. These tasks include accounting, bookkeeping, administration, procurement, and preparation of financial statements

Outsourced Fund Administration

This service is specifically for funds and takes care of all the administrative aspects of the fund like fund accounting, expense monitoring, trade reconciliation, distribution waterfalls, taxes, fees, incentives, expenses, etc.

Strategy and Business Development support

After the investments, most PE firms focus on growing the revenues of the portfolio companies. This is done through a slew of interventions on strategy and marketing. Magistral supports these activities by providing services like consumer and market studies, new product or market development, lead generation, which is critical in the B2B space, and finding follow-on acquisition or buyer for the investee companies.

And this is how Private Equity consulting joins forces with offshoring to provide an unbeatable competitive advantage for our clients.

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

Introduction

Financial process outsourcing has been on the horizon of businesses for over a decade now. But there are a few trends that are making this process all the more strategic. It is not only about cutting costs, but having the right partner who could improve the processes, change culture, bring in the new talent and technology and make finance more predictive and proactive.

When it comes to Financial Process Outsourcing, the following trends are changing the landscape of the industry

Smaller and niche clients

Bigger players with a headcount of hundreds of thousands started taking advantage of outsourcing around a decade back. They are increasing it in terms of scale and complexity, however, the major volume is now going to come from smaller players as small as 1 or 2 men companies. Niche processes that are difficult to deliver on a turnkey basis also show promise.

Technology

Technology impacts all industries all the time. Financial process outsourcing is no exception. It has now moved from process outsourcing to process reengineering to automate steps and bring down the costs further and improve the operational efficiencies

Outcome-based offerings

Outcome-based offerings are still to take off but are on the horizon. It makes the vendor, your business partner where they are accountable for business results and not only delivering on the processes. Metrics related to a reduction in sales outstanding, operations costs, cycle time reductions, liquidity improvements, forecast accuracy are a few related to advisable business outcomes

Strategic importance

Outsourcing started as a low-cost low-value add jobs outsourcing. It still is to some extent. However meatier and strategic jobs are now being outsourced. Processes like budgeting, fundraising, investor communications, etc. are also being outsourced apart from the run of the mill accounting jobs

Advantages of Financial Process Outsourcing

There are multiple reasons why outsourcing the financial processes is the best way of doing it. The reasons not only involve cost savings but a host of others that raise the operational standards of the client, whatever business they are in.

Magistral's Financial Process Outsourcing Advantages

Financial Process Outsourcing Advantages that Magistral Consulting Offers

These advantages are:

Cost

Of course, cost considerations here are tangible and very obvious. One dollar saved is a dollar earned. That is a saving that starts showing in the P&L as soon as you decide to outsource. Depending on your location and the process that you wish to outsource a savings of 50-80% is very normal and can be expected.

Flexibility

Apart from the absolute cost savings, there is a further scope of savings due to fractional resources. Fractional resources mean that you are not hiring anyone permanently but are tapping into the skill and experience of the resources only as and when required.

CFO outsourcing

CFO outsourcing or substantial outsourcing of strategic tasks is an emerging trend. This is all the more important for start-ups or funds that are small and can’t afford a full-time CFO.

Focus on core tasks

Outsourcing frees up the management and workforce bandwidth to focus on more strategic aspects of business and operations

Technology

As the vendor is experienced and has worked on outsourcing similar processes from other clients as well, it’s in a better position to recommend and implement a technology that might reduce the effort or improve the turnaround time for a process. It is done by automating several tasks of the process using Artificial Intelligence and machine learning algorithms.

Operational efficiency improvements

Outsourcing to an expert improves the operational efficiency of a process by multiple notches. Something like an increase in efficiency due to touchless processing, reductions in operations cost, and reduction in Day Sales Outstanding (DSOs) are very typical operational outcomes of outsourcing

Improved plan compliance and making finance more predictive

With tools like dynamic real-time scenario planning, dashboards, visualization tools, data science and analytics, and on-demand reporting, it’s possible to make the finance function more predictive

Financial Process Outsourcing: What could be outsourced?

Financial processes that are low value add and not strategic could of course be outsourced. Now added onto transactional outsourcing is the strategic outsourcing elements that require specialist interventions. The activities that could be successfully outsourced are:

Bookkeeping and back-office support

The activities that are time tested to produce cost benefits and improve the quality of operations are account reconciliations, deferred revenues, customer billing and payments, expense processing, general ledger, financial and tax reporting, currency consolidation, payroll services, and vendor invoicing.

Controller services

The services like audit reports, auditor facilitation, compliances, MIS, dashboards, etc form the backbone of outsourcing here

Financial Planning and Analysis (FP&A)

This is the bulk of the planning and analysis aspects of the Finance function. This includes acquisition integration support, board reporting, financial data analysis, ratio analysis, comparative analysis with competition, financial research, along with planning, budgeting, and forecasting

Fundraising

This aspect requires a very specialist intervention. Here the offerings include pitch deck content and design support, investor reach-out, modeling and valuation, and investment bank’s selection

Mortgage process outsourcing

This is a specialist process of a lender whose critical elements could be successfully outsourced. These elements are marketing, loan origination data entry and analysis, underwriting documentation, background investigation, property assessment, accounting, financial checking, documentation checking, mortgage underwriting, and every other micro sub-steps required for the evaluation, underwriting, and approval of loans.

Magistral’s tried and tested process for outsourcing

Magistral has helped scores of clients in the financial industry and elsewhere in outsourcing operations. Magistral follows a customized and low-risk process for a smooth transition. The process puts business continuity and risk minimization at the center. Here are the major steps in offshoring that is proprietary and unique to Magistral:

Magistral's Financial Process Outsourcing Steps

The approach followed by Magistral Consulting for outsourcing financial processes

Project Kick-Off

There is a call with all the client stakeholders to understand their challenges and expectations from offshoring a process. Once the business imperative of offshoring is understood, a proposal for services is prepared. The proposal carries in detail the commercials, methodologies, KRAs and KPIs, project plans, and other details required for client management to take a call. Once the proposal is signed off the action begins.

SOP preparation

Before taking any project for delivery Magistral invests a great deal of time and expertise in preparing Standard Operating Procedure documents. For preparing SOP a trained analyst gets in touch with the client SPOC (Single Point of Contact) and by his skills in business analysis brings all the knowledge of people onto a process document. We call this “bringing what is between the ears onto the paper”. Every fine detail is captured. A Magistral SOP document would carry lots of process diagrams, tips for analysts, swim-lanes, along with audio and video recording of meetings and training. The whole of this process is done without any cost to the client. Clients first-hand see the expertise that Magistral brings to the table without any investment on their part. Once the SOP document is ready, the signoff about its accuracy is taken from the relevant personnel in management. Till this point client does not spend even a single penny and we are fine about it.

Business Reengineering

Once the detailed SOP is ready, business reengineering opportunities make themselves evident. There are processes where either cost could be reduced or turnaround time could be improved by Artificial Intelligence, Automation, and Machine Learning. The same is shared and validated with the client.

Pilot Projects

Our proposals are always signed based on the projects or milestones that we deliver. It is never based on the number of people (FTEs) that we employ to deliver services. Normally vendors will charge for FTEs and then they will sit and undergo process training at the client’s expense. With Magistral, you only pay when we deliver the project or processes that meet your quality standards. We start with low volumes. Trainers get trained in the process. Coordination with the client is very close and done almost daily to fill any gaps in delivery and expectations. For bigger projects, an onsite analyst sits with the client for weeks and is responsible for business analysis and knowledge transfer.

SLA finalization

Many times, there are no Service Level Agreements decided for internal teams. We make sure we are accountable for everything we deliver and decide the SLAs of every process. These SLAs can be in terms of improvement in quality, turnaround time, analyst’s availability, prompt acknowledgment of requests, etc. With Magistral, if you have internal SLAs, we promise to beat that further with at least 20% improvements.

Process Stabilization

With SLA compliances meeting standards, we increase the scope and volume of work offshored.

 

The phased approach ensures the client is never too invested to back off. The process is also designed to give enough confidence to the clients to trust the expertise of Magistral.

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

 

Introduction

Around the globe, there is a trillion-dollar business of investing in all sorts of assets like equity, both public and private, real estate, and upcoming assets like cryptocurrencies. Once the investment is made, the task on the part of the investor shifts to investment management. There are many activities of investment management that could be outsourced and that is what leads us to analyze the stream of investment management outsourcing. Investment management and hence investment management outsourcing takes all forms depending on the asset being invested in, and the prime business of the asset or investment manager.

Here we take a look at major activities of each type of investment manager or asset manager which could be effectively outsourced to save on costs and improve quality.

Who Should Outsource Investment Management and How?

Outsourced Investment Management

Outsourced Investment Management for different types of Asset Managers

Private Equity and Venture Capital firms

The underlying asset that a Private Equity or a Venture Capital firm invests in is equity. Sometimes it’s for stocks listed on exchanges but most of the time these are private investments, the target of which are start-ups are unlisted companies.

In the PE/VC value chain of investing, there are activities like Fundraising, Deal origination, Deal execution, and Portfolio Management. Quite a few activities in these departments are outsourceable. For fundraising, the activities like investor reach-out, investor profiling, CRMs, newsletters, white papers, and data management jobs could be effectively outsourced. Regarding, Deal origination, the deal pipeline management has a great potential of outsourcing along with initial due diligence. Deal execution processes like valuation and financial modeling are templatized and could be considered. Portfolio management has varied activities and outsourcing potential vary as per the nature of the business of the portfolio companies. Most activities related to Strategy and Marketing have great potential for outsourcing when it comes to Portfolio Management.

Hedge Funds

For the most common type of hedge fund out there, that is a long-short equity hedge fund, multiple activities should be considered for outsourcing. Equity Research is the foremost one. The research that is done for the investors is almost always best to be outsourced. Apart from Equity Research, Fund Administration and Fund Accounting are better done when outsourced. It makes sense from the cost and expertise point of view. Marketing activities almost always have great potential for offshoring.

Real Estate

Managing a real estate asset after the investment comprises standardized work-streams. Most of it relates to collecting data, analyzing it, making reports, and raising red flags if any. Accounting and administration along with research has a great potential for outsourcing

Investment Banks

Investment Banks are into all sorts of assets directly or for their clients. For the varying types of their work pallet, there is varying potential for outsourcing.  For investment banks, activities that are commonly outsourced are Equity Research, Security-based Investment Research, development of excel or other automated models, investment research for private investments, marketing, deal origination, and deal execution. In fact, 30-50% of all activities performed by an investment bank has a solid potential for outsourcing that may be explored

Asset Management Firms

These are for specialized asset managers like managers managing a portfolio of crypto or commodities. There is no one size fits all approach to outsourcing for these asset managers. As a thumb rule, everything related to technology like platform development, automation, website development, or software development can be outsourced. Also, anything that is of support function’s nature like Strategy or Marketing could be looked at.

Models of engagement with the outsourcing vendor

Once you have made your mind to explore outsourcing, the biggest concern is around the way an outsourced vendor or the service provider would work with you and your team. There are three established models of working while outsourcing. These are FTEs, Retainer, and Ad-hoc. Some progressive vendors like Magistral are signing up success-based contracts too.

Outsourcing Engagement Model

Investment Management Outsourcing Engagement Model

FTEs

FTE the most common engagement model for investment management outsourcing.

FTE stands for Full-Time Employee equivalent. It’s like a virtual employee who is operating from a different country. This virtual employee could be coordinated with, on email, video calls, WhatsApp, chats, or any other mode that is suitable to the client and is convenient as per time zone differences. It looks like a person is aligned with the client full time and he works seamlessly with the client. That is always the case, but the vendor, his processes, training, supervision, and culture play a big role in ensuring the continuity of services. A vendor enables the FTE to perform optimally by providing training and desired supervision. The vendor’s processes ensure that the client is insulated from the bad performance of FTE as the work is supervised by more senior resources. In case the individual decides to leave the organization, similarly, qualified and trained professionals are available on the bench for the replacement. That is the reason it makes sense to work with individuals through the service providers who may be an established name in their industry. Working directly through freelancing websites or hiring directly exposes clients to manage costs and risks, which is not the case while dealing with an established service provider.

This also is the cheapest model on per hour basis. But it is inflexible as there may be contractual obligations for a minimum period of support. This case is more prominent when resources are specialized in niche skills

Typical jobs that require FTE engagements are operational, where the offshored team works with the onsite team seamlessly. So, if a task is part of your ongoing investment management operations, mostly it will be outsourced on FTE-based engagement.

Retainer

You know there is a need for outsourcing tasks. At the same time, you think a full-time individual working on these jobs may be overkill. In these situations, where tasks just require some hours every month, the retainer model of engagement comes in handy. Say rather than hiring an FTE or a full-time virtual employee, you would only want 100 hours’ worth of tasks outsourced every month. A retainer is far more flexible than FTEs but costs higher on per hour cost basis. Typical jobs that are suitable for retainer-type outsourcing are newsletters, MIS, reports preparation, and other marketing-related tasks.

Ad-hoc Projects

As the name suggests the engagement is for one-time projects only. A client gives out the scope of the project. The service provider or the vendor provides a proposal that carries, scope of work, timelines, and commercials. The project kicks off after the client signs off the proposal and is paid after the delivery of the project. Almost any project that is strategic and is not expected to be repeated on an ongoing basis is an ideal candidate for ad-hoc based outsourcing. Also, it’s an ideal mode, if you would want to test the services of a vendor before signing a longer-term contract. It is the most flexible outsourcing arrangement as projects may start or end at your convenience, but at the same time, it is costliest in terms of cost per hour basis.

Success Based

Most traditional service providers shy from signing a success-based engagement. The fear stems from the trust deficit, performance fears, and the complications of defining a success scenario. Magistral signs success-based engagements with clients, with whom it has existing relationships. Existing relationships take the risks related to trust deficit and performance. A mutually agreed “success” scenario could also be defined in those situations. The tasks that are outsourced under these arrangements usually relate to fundraising, deal sourcing, and meetings’ set up

Magistral has helped more than 100 clients in outsourcing and offshoring multiple activities related to the Investment Management process. To start a conversation drop a line here.

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

 

 

 

Investment Management Outsourcing for Emerging Managers

Operations outsourcing by financial institutions is a trend that is fast picking up. Though bigger banks had taken a lead over other investment management firms earlier, now is the time for highly specialized firms like Investment Banks, Private Equity, Venture Capital, Real Estate, Family Offices, Hedge Funds, and Asset Management firms to take advantage of outsourcing. The reasons for the same are quite simple. It leads to cost efficiency and improvement in operational flexibility with absolutely no dilution in terms of quality. It leads to quality improvement with an experienced vendor who is working with multiple clients like you. Though it’s easy to understand how it leads to benefits for an organization on a headcount of hundreds and thousands. However most vital is the support for emerging managers.

Benefits of Outsourcing

There are multiple benefits of outsourcing for financial institutions big or small. Here is how they could benefit if they are considering outsourcing

Cost Advantages

Outsourcing is typically delivered from a low-cost country like India. India is behind western countries in terms of Purchasing Power Parity (PPP). If ten dollars can buy you a burger in New York, it might buy you a 2-bedroom flat in Delhi. I hope you get my feeble attempt at humor. A fine dining experience at the cost of a burger may be a better analogy. The point here is that you can get the same quality at a far lesser cost if it is delivered from India. Depending on your location, there is a potential of saving 30-70% of the operational costs, with virtually no impact on continuity or quality. The potential of savings is meaty for geographies like the United States, the United Kingdom, Europe, and Australia

Remote workforce

Covid 19 has re-laid the rules of working forever. Remote work is now going to be a mainstream option even for demanding careers in investment banking and investment management. Whether the Analyst works from New York or New Delhi, there is little difference. There is little reason then, to not work with the brown guy based out of India!!

Quality

Outsourcing has low-quality connotations. Yes, outsourcing did start with low-end jobs like customer care and call centers, but that was a couple of decades ago. Now there have been waves of outsourcing and with every wave, the type and quality of outsourced work improved. After call centers, it was IT. Now it’s the turn of financial management and Research and Development that is riding the wave. Quality is better than in-house work. The reason for that is the outsourced team works with far more similar assignments than an in-house team. This is all the more important for an Emerging Manager who are still picking up the ropes of operational quality and scalability

Databases

The assignments related to fundraising, deal origination, deal execution, and due diligence require access to multiple databases. If a firm goes for signing up for each database, it ends up being a big cost bucket. With an outsourced player, these costs could be controlled as the vendor’s costs are distributed over multiple clients

Scaling up and scaling down

An emerging manager is thin on the workforce. So, when the deals come in, there are times, when the deal pipeline is more than what the current team could handle. The ad-hoc arrangement can lead to a loss of quality. Outsourcing is a perfect solution for this situation. Experienced resources are available on short notice and churn the assignments that are at the level of global quality

Flexibility

Multiple outsourcing models exist, where a Full-Time analyst can work with you from an offshore location like a virtual employee. Or you can subcontract the work on an hourly basis or give out a project on an ad-hoc basis. Whatever is the model, the quality of the work remains steady. You are always in control of the costs too

First Mover Advantage

Outsourcing for high-quality critical work has started to pick up. It is just a matter of time, that they would eventually be delivered from offshore locations. The companies that pick on this trend earlier have a competitive advantage over other players in terms of pricing their services. In-fact developing comfort working with teams that are dispersed across geographies is going to be a competitive advantage not only for financial services but across industries. Emerging Managers gain massively from this trend as it gives them a pricing advantage with their initial set of clients.

Magistral’s In-House Investors Database

Magistral has an in-house database, that carries records of 25000+ global Limited Partners and General Partners. This database is priced to suit the budget constraints of emerging managers. This is by far the cheapest such database. Even after being priced so low, it is an effective way to get started on reaching out to investors.

Time Zone difference

The work happens while you sleep. Not that, someone sits with a laptop beside your bed and works, but time-zone difference ensures that your operations effectively move both in the day and the night. In the day onsite teams move the work, while in the night, due to time zone differences, the offshore team moves the work. Offshore teams pick up the work from where it was left by the onsite team. Assignments effectively move at double the pace.

 

As these are the general benefits of outsourcing to all players, big or small. For Emerging Managers outsourcing is absolutely critical as this may be the only way to start the operations on a shoestring budget of Emerging Managers

How does outsourcing help Emerging Managers?

Operations Costs

When Emerging Managers are starting up, money that can be spent is always an issue. Outsourcing keeps the costs low and that is exactly what is required at that stage. This is also relevant for start-ups in the investment management space.

Operational Know-how

Emerging Managers may be experienced, having worked for many years before going on their own. At the same time, they could come up with a new idea and may have limited experience in the traditional areas of fund management and fundraising. Outsourcing may bridge the gap in terms of know-how as the outsourced vendor may have helped the clients in a similar space.

Flexibility

An outsourcing vendor offers unmatched operational flexibility like having a resource working on a specialized assignment just for a week, or designing a pitch deck by an experienced designer in a couple of days. This flexibility is also extended when it comes to prices of services.

Agility

Emerging Managers enter a space based on a few assumptions about an industry and its potential. After entering the market, there may be a realization that potential may not be there or maybe suspect. Also, there is a need of changing tracks multiple times during the initial days in the business. Here hiring for a set requirement when the business is not established can lead to loss of flexibility.

How to go about Outsourcing?

If you have read, so far, I suggest you check our website www.magistralconsulting.com. Please feel free to write in and ask for our work samples and client references in the areas where you need support.

Magistral Consulting has helped multiple Emerging Managers in establishing their operations on shoestring budgets. The offshore team is capable to deliver projects related to the complete value chain of the investment management like fund-raising, deal origination, deal execution, and portfolio management. To schedule a discussion please visit here.

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

 

 

Introduction

Are you thinking about operations outsourcing?

So, you are a Private Equity or a Venture Capital firm that invested in a portfolio company? Or you are the owner of a small or family business and want to change the culture? Or you are an advisor to firms that are looking to reduce operations cost? This article may help you.

 

The company has been in existence for decades and has had a decent run in terms of profitability and growth over the years.

Or, it’s a tech or SaaS startup and has the potential to see explosive growth in a short time.

 

Whatever is the case, assessing the potential of operations outsourcing should be the first step for any investor, owner, or advisor who can call shots when it comes to the strategy of the portfolio company

 

We will detail out the challenges of a new investor in the portfolio company and then go onto make a business case for outsourcing. We will also let you know the required process to outsource the chunks of operations for the newly acquired company.

Challenges of a new investor in the portfolio company

Here are the challenges that investors face after investing in a portfolio company

-Quick and Profitable Exit: The portfolio company is at a promising stage. It is either giving consistent returns from the past or has the potential for explosive growth. The investor needs to improve the revenue and profitability dramatically for a juicy exit in 5 to 10 years.

-Change Management: If the company has been around for some time and is generating decent returns, the next step would require shaking the complacency of family or small businesses, so that they are ready for the next stage of growth

-Focus: If the company is comparatively new, the focus should be laser sharp on a few key metrics like subscribers’ growth, conversions, clicks, etc. Though the focus is on a few key metrics, still management needs to keep an eye on the other operational metrics too.

– Non-controlling stake: Not all the time investors may have a hold on the management and decision making. Even without being in control, the investor needs to add value with effective advisory with the minority stake

A few quick wins in these situations go a long way in assuring Limited Partners and the management of the newly acquired company about the investor’s ability to turn around the situation.

How does operations outsourcing help?

Here is how outsourcing helps in multiple ways in the situations explained above:

Reducing the operations cost quickly: There are lots of apprehensions about what could be outsourced. Smaller companies think outsourcing produces impact only for the headcount of hundreds of thousands. That is far from reality. Any job that could be performed away from the office could effectively be outsourced. Outsourcing reduced the cost of operations anywhere from 20% to 70% depending on the location and the operating model of the business

Brings in critical skills without much risk: When investors identify priorities, they quickly need to bring the critical skills onboard. Outsourcing could help in bringing those niche skills without any performance risks.

-Improves the pace of implementation: As there is an extended partner, sitting out in a different jurisdiction, that ensures critical skills are available as soon as possible, there is a remarkable improvement in the pace of implementation of strategic initiatives.

What could be outsourced?

Outsourcing has a low-cost low-quality connotation. Outsourcing as an industry has come a long way since its beginning as low-cost low-quality jobs. Currently, there will not be any Fortune 500 company on the planet that may not be outsourcing any of its jobs. That does show the indispensability of outsourcing but does nothing to quell fears related to quality. Currently, the jobs that could be outsourced, not only belong to the low-end customer care jobs, but high end as well like Investment Banking. Magistral has helped dozens of its clients in outsourcing operations to low-cost countries like India.

Here are the examples of jobs that were successfully outsourced

-Design engineering for an interior designing firm, including kitchens and bathrooms

-Bill of Material preparation for a civil contractor

-Digital Marketing for a SaaS-based investment platform

-Handling high-end B2B accounts related inquiries

-Preparing legal agreements for a BFSI player

-Managing procurement function of a steel company

Well, this may be a small piece of the universe, but you get an idea. If you need an operational element outsourced, but are not sure if it could be outsourced, visit here, for a free assessment. If you are still not convinced, read further to understand the safest way of doing this for your portfolio company

How to go about operations outsourcing?

Here are the stages involved in an effective operations’ outsourcing

Business Analysis: An outsourcing potential assessment starts with a detailed business analysis of the current operations. All operational elements are evaluated on the potential for outsourcing, risks related to outsourcing, and the criticality of the job for the operations. Depending on the business analysis, the recommendations are suggested for either complete, part, or no outsourcing for all operational jobs. The business analysis could be done over online meetings or onsite visits depending on the scope of the outsourcing project

Knowledge Transfer: Knowledge transfer from onsite to offshore is done effectively in conjunction with the client. SOPs, KT plans, RACI, SLAs, and other tools are used to make sure knowledge transfer is effective, accountable, and rapid. At the end of the knowledge transfer exercise, all the knowledge in people’s heads is transferred to standard operating process documents. The client signs off the documents for further steps

Dry Run: Once the KT is completed, a dry run is undertaken for a small part of operations, being performed from offshore. Service Level Agreements and Operational KPIs are monitored closely. Some initial hiccups are expected in this stage of the process. All hiccups are slowly ironed out. Once all KPIs and SLAs stabilize, the process moves to a wet run.

Wet Run: In the wet run, the process is scaled up for multiple areas, but still a small portion of each area at a time is taken to be delivered from offshore.

Scale Up: Once KPIs and SLAs stabilize after initial hiccups of dry run and wet run, the offshoring is scaled up for the complete process. Effective governance and quality control measures ensure the process stability throughout the engagement

The multiple stages of offshoring protect the investor and the portfolio companies from shocks related to performance and job quality. At every stage, there is a mechanism to see if things are working out as planned. Corrective measures could be taken as soon as the deviation occurs.

Magistral has assisted multiple investors in outsourcing operations of portfolio companies through this process. Magistral has also helped multiple small and medium-sized businesses in the United States, United Kingdom, and Europe in taking advantage of Operations’ Outsourcing.

To commission a business analysis for a portfolio company visit here. To know more about our capabilities, visit here

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

 

 

Background

Magistral Consulting is a leading research, analytics, and consulting services provider to global Investment Banks, Private Equity and Venture Capital firms, Hedge funds, Family Offices, and Real Estate firms. As part of its product strategy, it launched an investor database starting 2021.

We help these global financial firms in outsourcing operations and many times end up managing their fund-raising and investor relations’ process. After doing the fund-raising exercise for multiple start-ups and emerging managers, we found ourselves sitting on a wealth of insights in terms of investor leads. These investors comprise Limited Partners like Family offices, Sovereign Wealth Funds, Insurance companies, and HNWIs, who invest in funds like Private Equity, Venture Capital, Hedge Funds, and Real Estate Funds. The investors also comprise General Partners who invest in start-ups right from seed to later stages.

It was an organic strategy to wrap all these leads into a database that may help funds and start-ups looking to raise funds. We also wanted to keep it affordable and still actionable.

Challenges with current investor databases in the market

We strongly felt there was a current need in the market in terms of an investor database, that is not being met. Here are the gaps that we observed in the current set of databases existing in the market:

Cost of Investor Databases

The investor databases are available in the range of $5000-$25000 per month. On top of that, most demand a minimum commitment in terms of months of subscription. The costs go further up with the number of users. These costs are prohibitive for an emerging manager or an unfunded start-up, which are operating on shoestring budget constraints. We were ourselves in this situation and realized that preparing leads organically was a better solution than buying a database and then holding onto it, without any guarantee of it carrying the leads that we need.

Information overload

Databases must have started with a simple leads platform but on their way would have added other information too. Right now most databases carry all sorts of relevant and irrelevant information. There is investors’ information along with deals, news, and company profiles. Remember, it’s the database buyer who pays for all the information aggregated in there, even the useless ones.

Someone who is looking to raise funds needs email IDs and names to reach out to relevant investors. Researching their deals and requirements come at a later stage when investor allocates time to know more about the offering. We provide all that information customized and don’t bundle it with the database. That keeps our database simple and costs under control.

No scope of customization

Most databases on the market are on an “as is where is” basis. They do give a short demo, but once bought in, you may end up not finding any meaningful leads for your specific requirements. We have taken that performance risk out of the equation with our database. We offer 1000 customized leads that will be delivered within a week along with the complete database. It’s like you have access to all the global LPs from the database but would also want LPs specializing in South American markets. The database will provide the former and the customized effort would provide the latter. Of course, the database is also available on “as is where is basis” at very minimal costs.

Quality of Investor Database

The quality of the databases available right now in the market is not up to the mark. In the scores of fundraising assignments that we did for several clients, we ended up using several databases available in the market. Emails bounced off generally for 20-30% leads. Magistral database has an allowed bounce rate of lesser than 10%. That means more chances of your message reaching the desired target audience. 

No specialization

There are way too many players, who offer leads to almost any industry for any decision-making designation. These are scraped data and most of it is junk. Our database is geared towards the aim of raising funds for emerging managers and start-ups. We have the right leads from the verified investors, who may be exploring the investment opportunities. Magistral’s database is highly specialized and is prepared by analysts who have years of experience in the fund-raising process.

Analyst on Demand

On Magistral’s database, you can reach out to a research analyst whenever you want, for clarification on the data or further research on any of the leads or investors.

Differentiating aspects of Magistral’s Investor Database

There are many differentiating aspects of Magistral’s Investor Database.

Magistral's Investor Database Features

Magistral’s Investors’ Database Features

Database Cost

Magistral’s Investor Database costs to fit in budgetary constraints of an Emerging Manager or an unfunded start-up. The cost of Magistral’s Investor Database is only a few hundred dollars and it gives you a head start with investors right away. Even a single successful contact will bring over multiple times returns on the cost invested on the database. For knowing more on pricing plans visit here.

Customized leads

We promise 1000+ customized leads for your requirements. If you are only interested in leads of Limited Partners based out of the Middle-East, just drop a line and it will be made available to you within a week. All these leads are researched in-house by an analyst who has significant experience in the fundraising and investor reach-out process.

Designed by specialists

Magistral has helped multiple asset managers and start-ups in raising funds. The database was designed to aid internal teams in reaching out to investors before being floated as an independent product. The data is made by analysts who have raised funds and understand the exact pain point of the managers looking to raise funds.

Minimal and Right Data

Data availability follows a minimalist approach. We only provide the data that is required to make the first contact. We don’t overload the managers looking to raise funds with all sorts of data about every player on the planet which may never be used. Once the first contact is made and you need further information on the investor, you could always write to an analyst on demand, who would provide all the detailed information within 24 working hours.

Analyst on Demand

Analyst on demand is available for researching more leads, profiling investors, preparing pitch decks or Private Placement Memorandums, financial modeling, and other jobs related to fundraising. Pricing of each type of service is quoted upfront and remains the same for all iterations and changes in the scope. So, there are no worries related to overbilling in terms of billed hours for an assignment. We are always conscious of your budget.

Bounce-back Guarantee

We guarantee 100% leads with an email ID. We also guarantee more than 90% of the leads with a postal address. We also estimate less than 15% bounce backs from the mails sent to the investors.

If you would want to have a demo of the database or would want to subscribe to Magistral’s Investor Database, please drop an inquiry here.

Breadth of Information

The database carries further smaller databases like Angel Investors Database, Institutional Investors Database, Accredited Investors Database, Indian Investors Database, Crypto Investors Database, Private Investors Database, Infrastructure Investors Database, Stock Investors Database, and multiple other categories. We are continually updating the categories on our website.

User-Friendly Features

All the data could be downloaded into excel sheets for further analysis and integrating the data with the CRM systems. The investors could be searched by location, specialization, investment preferences, size, and several other relevant criteria.

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

 

Introduction

Sell-Side Research services are going through a paradigm shift. A recent survey of Buy Side managers considers “Research” as an important element while deciding the investing avenues. At the same time, it is assumed that “Research” would be bundled with the offering, without being paid for separately. This leads to optimizing a loss leader, where controlling costs become as important as the depth of the research.

Outsourcing sell-side investment research services present a compelling proposition. It leads to maintaining almost similar quality while bringing in the savings in terms of operations’ cost.

In the article, we will evaluate the various functional areas of Sell-Side research that could be outsourced effectively

Fund Raising Services

Buy-side managers are flooded with requests from all sorts of financial instruments and Fund Managers. For smaller funds, the best chance of raising funds is from their personal network. Once those opportunities are exhausted, more reach out could be outsourced for cost efficiencies. Also, for smaller emerging managers, it takes quite some time to close the maiden funds. The best option is to carry on with providing the returns to existing investors and improving the track record while attending all the investor meetings that come their way. Success is hardly overnight. Outsourcing the fundraising process saves precious dollars of a smaller fund while still maintaining the reach-out process effectively.

Sell-Side Research

We have categorized the sell-side research by the organizations that undertake them. They could very well be categorized by their specialization or industry

Sell Side Research Services

Sell-Side Research Services

Sell-Side Research- Corporate M&A

Sell-side research in corporates revolve around M&A. Carving out a division and finding a suitable buyer for the division is a typical sell-side research assignment in the sell-side M&A process value chain. Here, the companies that might be interested in buying the said business is researched, depending on the synergies that the business division offers. Once companies are identified, the personnel list is drawn to finally commission a reach out to set up meetings. A business division depending on its financial performance could be sold anywhere between 6 months to 2 years. Valuations are driven by situations, markets, and negotiations.

Sell-Side Research- Investment Banks

Equity Research coverage forms the backbone for Sell-side research and analysis at Investment banks. Equity research reports are prepared with all the relevant information on the stock related to past financial performance, future financial projections, industry, economy, and other quantitative and qualitative factors. All the analysis leads to the recommendation in terms of Buy, Sell, or Hold for the stock.

Sell-Side Research Platforms and Market Makers

For the research services for platforms, all the administrative services could be potentially outsourced along with the technical aspects of managing a website or an app where the transactions take place

Stocks, Bonds and Foreign Exchange Sell-Side Research

Stocks, Bonds, and Foreign Exchange are the assets that are most traded across the globe. Quantitative and qualitative analysis along with macroeconomic or sectoral research could be potentially outsourced by the Sell Side Managers

Sell-Side Research- Private Equity and Venture Capital

When we talk about Sell-side in the Private Equity or Venture Capital industry, we are talking about further rounds of fund-raising or exiting a portfolio company for various reasons. The exits could also happen via IPO or an M&A with a bigger player. Here research plays a vital role in finding the investor or the M&A suitor. The analysis and documentation support can also be outsourced

Sell-Side Research- Real Estate

Here the sell-side research is mostly concerned about raising funds or selling the assets that may have completed their financial life for the original investor

Sell-Side Research Activities

Across the types of Sell-Side managers, the following services can be effectively outsourced without any dilution in the quality

Sell Side Research Activities

Sell-Side Research Activities

Company Profiling and Analysis

These may be the companies that may be suitable for M&A. Preparation of profiles by a third party also leads to unbiased views. A typical company profile includes meeting notes, earning analysis, business strategy, company overview, markets, management, and valuation. Sell-side due diligence is also part of this exercise.

Thematic Research

A thematic research report explores a specific sell-side market. It carries all the details about the market, major players, innovations taking place, its future, and the scope of the play. Thematic research also builds on inputs from the experts in those areas. Expert interviews are conducted to uncover the insights not available in the secondary domain.

Pitch Book

Pitch books are created to pitch the sell-side offerings. Pitch books are assisted for the design that complies with global financial standards. Well researched content is also prepared from the client’s feedback and market study

Fixed Income Securities Analysis

Analytics services to calculate various scenarios of returns for securities is a typical assignment. The scenario analysis of interest or returns changes could be built into the model to showcase the security analysis. Other quantitative and qualitative research can be effectively outsourced.

White Paper and PoVs

White Papers and PoVs are effective marketing tools for fund-raising. It shows the command of the Asset Manager on the market and the shape that it is going to take in the future. White Papers and Point of View documents are circulated to investors regularly for fund marketing. A well-researched and well-designed white paper goes a long way in creating a great impression. The research for these marketing materials could be effectively outsourced.

Mergers and Acquisition Support

M&A support span through list building, company profiling, due diligence, detailed due diligence, data room management, and post-merger integration. Much of the data-intensive work could be effectively outsourced to bring down the cost of acquisition. These projects are usually taken up by Investment Banks and Corporates looking for M&A.

Financial Modeling

Financial Modeling is an essential step to find out the valuation of the asset that the sell-side has to offer. A great financial model builds on reasonable assumptions and is flexible to take feedback from all stakeholders. This goes a long way in convincing the buy-side managers about the attractiveness of the deal. A financial model can be effectively outsourced to a competent agency that has experience in the space

Lead Generation Support

When an ideal profile of a buyer is shared, the outsourced team gets busy with finding similar firms, and within those firms, the relevant personnel who may be of interest to pursue further. These leads could be actioned as well, by the outsourced team. The result is setting up of relevant meetings for the sell-side to sell its offerings.

CRM

All funds that want to be in touch with all their potential investors use effective CRM to distribute fund documents, fund performance, newsletters, market reports, and other knowledge documents. A well maintained CRM is key to be in the eyes of investors continuously. The CRM needs to be populated with the relevant leads and pruned for irrelevant or outdated ones. The outsourced team delivers on this effortlessly. Also delivered are the knowledge pieces or white-labeled content that could be distributed to investors periodically

Structured Product Research

Marketing Documents, PoVs, and Business case or Investment case are prepared that are customized as per the client’s requirements.

Real Estate and Commodities Reports

A well-written report dealing with a GP’s area of expertise in Real Estate or commodities is not only useful from a marketing point of view but is also critical for creating trading strategies. A templated report for Real Estate and Commodities could very well be delivered by an outsourced team. All the content delivered is white-labeled and can be branded as per the client’s requirements.

Sell-Side Equity Research

Equity research using DCF modeling and comps is done to arrive at the stock price and the recommendations, to buy, sell, or hold. An outsourced team could track far more stocks than an internal team and can go into more depth. Tracking more stocks improves the sell-side decisions

Regulatory Reports

In markets where a regulator plays a vital role, regulator reports are critical for operation. Any new law, new regulatory changes, or compliance requirement is analyzed in detail in the report. The report also suggests the recommended business action to take advantage of changes or avoid complications.

Confidential Information Memorandums/ Private Placement Memorandums

CIM or PPM and pitch decks are the most widely used fund documents. They serve an important marketing function but at the same time need to comply with regulatory standards. An experienced outsourced team could deliver on the requirements that are comparable to global standards of fund documentation

Macro-economic and Sector Reports

Macro-economic reports are prepared for geographies where the sell-side is interested. Sector reports are made for the specialized sectors for the Sell-side. Both these types of reports could either fulfill the Marketing or Strategy requirements of the Sell-side.

Coverage Reports

These are specifically customized reports covering a set of stocks or industries like sell-side credit research reports.

Magistral Consulting is a specialized research and analytics agency that has helped multiple sell-side firms in the US, UK, Europe, and Australia in outsourcing operations and delivering cost savings. To drop a business inquiry click here.

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

 

 

 

 

Introduction to Sell Side and Buy Side

The financial world is full of transactions of all sorts. Whenever a transaction happens, there is a party who sells the asset and there is another party that buys the asset. The party selling the asset is the sell-side and the party buying the asset is the buy-side. Assets could be private or public companies, real estate, and other financial assets that give returns or value appreciation over time. Buy-Side research plays a vital role in the success of a transaction.

The parties could be an Investment Bank, A broker, A Company, A Hedge fund, An asset manager, or any other type of entity owning the asset or representing the owner

 

What is Buy-Side Research and Analytics?

Buy-Side Research and Analytics concern with identifying the full potential of the asset that is being bought. It attempts to answer the following crucial questions about the asset being transacted. Finding the asset itself to buy is the most crucial part of the Buy-side research

– Does the asset have the potential to generate returns or value appreciation over time?

– Is the asset valued rightly?

-Are there any risks associated with the asset? If yes, what are the risks?

-Is everything makes sense from a legal point of view?

-Are the documents right and portray the complete picture?

-Are there any other assets that may be more suitable?

Buy-Side research attempts to uncover all aspects of the asset to ensure the transaction achieves its objectives of maximizing returns for its investors

Buy-Side research is a regular function at institutions like Investment Banks, hedge Funds, Family Offices, Fund of Funds, Private Equity, Venture Capital and M&A departments in Corporates

Types of Buy-Side Research

Buy-side research could either be categorized as per the asset class like public companies, private companies, funds, etc. or as per the institutions like Investment Banks, Fund of Funds that undertake them

Type of Buy-Side Research

Buy-Side Research Types

Buy-Side Research- Hedge Funds

Hedge funds operate on multiple investment themes. However, the most common one, the long-short equity hedge fund uses the buy-side research which is predominantly equity research. This comprises researching the stocks which are being taken a position on, long or short. A fundamental analysis using methods like DCF or comparables is quite popular with hedge funds. Apart from researching the stocks, the industry, or geography, or any other aspect related to the stock or Hedge funds’ investment theme is also researched.  For hedge funds that take positions for the long term for a few stocks, the research is fairly detailed.

Buy-Side Research- Family Office

There is no set template or scope for buy-side research when it comes to family offices because investment mandates of family offices vary greatly. In family offices, buy-side research is mostly about equity research, manager research, asset research, and private company due diligence.  Quite a lot of partner and broker research is also common. Equity research as with hedge funds revolves around the fundamental analysis of the listed stocks. Manager Research is about finding asset managers who could deliver superlative returns as per the investment thesis of the family office. A typical example of this would be say finding hedge funds that are investing in China and have delivered more than 10% returns annually over 10 years or more, with moderate or little risk. The assignment involves the collection and analysis of huge data to find the best performing hedge fund managers for the family office.

Asset research is done for family offices with an investment philosophy around a specific asset. A typical example here would be getting into the details of a Real Estate asset deal or a Real Estate fund or a cryptocurrency-based fund.  Family offices work with all types of brokers, investment agents, and investment banks. Finding the right partner who has experience in the relevant area of investment and offers a competitive fee for the services is also common for family offices to research.

Buy-Side Research- Fund of Funds

Fund of Funds and Family Offices research funds to park their money. Here buy-side research concerns about finding the best manager to manage the funds. Information is collected on dozens of fund managers, analyze their performance for an objective evaluation on their potential to generate alpha.

Buy-Side Research- Private Equity and Venture Capital

Private Equity firms deal with both private and public companies whereas venture capital firms solely deal with private companies, sometimes very small ones. Buy-side research here revolves around the due diligence of the companies that are intended to be invested in. Another important aspect of the research here is finding the targets that fulfill the criteria for investments. A typical assignment would be to generate a list of all the SaaS firms with revenue more than $10 million, looking for Series B or beyond, with presence in the United States and products centered around blockchain.  This is typically followed by profiling the right set of companies for investments or acquisitions. For smaller companies, there is primary research that is done to talk with people who may have information about the industry and the company

Buy-Side Research- Investment Banks

Research here acquires as many types as the investment banks themselves. It can range from Equity Research as in the case of hedge funds or list generation and company profiling as in the case of Private Equity or Manager Research as in the case of Limited Partners or Fund of Funds.  The only difference here is that Investment Banks perform these tasks for their clients who may be looking for investments

Buy-Side Research-Corporate M&A

Bigger corporates continually evaluate targets for synergies with their business. Inorganic growth is a well-accepted way to grow. Not only growth but companies evaluate targets to acquihire, getting a tech, enter geography or industry or to eliminate competition. Buy-Side research in these cases pertains to building target lists as per the acquisition criteria and profiling companies.

Characteristics of High-Quality Buy-Side Research

Whether one is looking to outsource Buy-side research or building an in-house function. These are the qualities of good buy-side research, that should be paid attention to:

High Quality Buy Side Research

Characteristics of high quality buy side research

Depth of Research

Research on the surface seems easier, but intellectual curiosity is required to get into the depth of the information presented. A company that appears to be satisfying a criterion may not have any business in the key area that is the source of synergies. This requires studying lots of data and information to make sure if the target has all the right attributes for evaluation. Primary research and ghost interviews help the cause of getting into more details. Asking the right questions to management and analyzing the documents provided by the company holds the key to get into in-depth research.

Rapid Research

Deals are time-bound. Sometimes it requires quick and dirty analysis and other times it requires studying hundreds of documents over months. Whatever is the case, your outsourcing partner needs to be reliable about sticking to the promised timelines. Sharing interims before the finalized deliverables help too.

Expertise

Expertise in buy-side research ensures research is being done the right way. It ensures the right questions are being asked, the right information is being sought and the information is analyzed with all relevant angles to arrive at an objective opinion. Buy-side research outsourcing partner needs to be an expert in the financial sector generally and buy-side research particularly

Outcomes

All the research that does not yield any outcome is useless. Researching a target and then not acquiring it because of red flags pointed by research is still an outcome, which saves millions of dollars for the client. Whatever is the case the research outsourcing partner needs to keep an eye on the business outcomes of their research activities.

Accountability

Most research partners are great order-takers. If a list is to be generated, it is generated as suggested. But a great research services partner goes a step further and takes accountability. After making the list from secondary research, they do primary research to make sure the information collected from secondary sources is correct. They ask the right questions from Asset Managers to ensure the client gets what they are looking for and not “unverified” data in an excel sheet.

Engagement Flexibility

A great buy-side research outsourcing player offers complete flexibility to their clients, with scalable engagement models, and have contracts that carry no significant exit barriers. Whatever is the engagement model the work quality is not hampered

Magistral Consulting has helped multiple Investment Banks, Family Offices, Hedge Funds, and Private Equity firms in outsourcing buy-side research functions. It has clients based out of the United States, the United Kingdom, Europe, and Australia. To drop an inquiry get in touch here

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.