Optimize portfolio management and identify strategic investment opportunities.
Maximizing NPV of Proprietary Outreach
We recommend starting with a baseline approach that we are confident will have positive NPV. From that baseline, we can increase the investment per target until NPV apparently declines. For example, we can invest more in message personalization, which improves conversion because it makes owners feel respected and helps them see you understand their specific business and its possible strategic opportunities.
Common PE Problems
Limited in-house capacity for proprietary outreach
Limited in-house capacity to evaluate businesses
Poor quality and limited amount of data on businesses
High cost of compensating, hiring, training, and retaining personnel
Not seeing all relevant deals on the market
Litefirm’s Solution
Acquisition-Target Sourcing - We execute a custom proprietary outreach program for you.
Acquisition-Target Screening - We conduct preliminary deal screening, applying your rules.
Acquisition-Target Screening - We gather the information you need upfront.
Turnkey Workflow Automation - We economically automate your unique approach to business development with our Global Workforce.
We can manage Intermediary relationship management and Business listing website tracking so you see as many as possible.
Invest Wisely for Higher Success
We illustrate below that if spending 400% more per target increases the success rate by just 33% then you are better off spending 400% more per target.
If your bottleneck is finding good deals, then the expected value of a “high-quality seller lead” (one that has a 10% chance of closing) is perhaps $200k = 10% of the economic value of closing a $10m deal, which might be $2m.
If your bottleneck is your time, then the expected value of the same seller lead is perhaps $25k = 10% of half of an intermediary’s commission (assuming buyer and seller split the savings), which might be $250k, or half of $500k.
Suppose we go with the lower figure of $25k.
Suppose that spending $1 per target results in a 0.3% chance of getting a high-quality seller lead. Then the NPV of that investment = 0.003 * $25,000 – $1 = $75 – $1 = $74.
Suppose that spending $5 per target results in only a slightly higher chance (0.4%) of getting a high-quality seller lead. Then the NPV of that investment = 0.004 * $25,000 – $5 = $100 – $5 = $95.
Investing more per target increases NPV because $95 is much higher than $74.
