Tamweel… 9 ½ weeks!
It’s been 9 ½ weeks since lockdown kicked in. The same length of time that Kim Basinger and Mickey Rourke’s relationship lasted in that cult ’80s movie of the same name. Hopefully this email will get better reviews.
So what do we know? Well…
… we now know what an epidemiologist is… although spelling it is still an effort.
… we now know what ‘R’ is… although no one can explain how to calculate it.
… we now know what lockdown feels like… and for many of us it is bloody awful.
And what have we learnt?
We’ve learnt that when the stakes are high getting it right first time matters. For Boris, he’s learning this the hard way. With every decision scrutinised. Every move dissected. And every announcement analysed by an army of experts, pundits and armchair politicians. It turns out that fighting pandemics isn’t easy. Who would have thought, eh?
What else have we learnt?
We’ve learnt that there are some remarkable similarities between the challenges faced by Government when handling a pandemic and the hazards encountered by advisors when deal doing.
Deal doing is also a high stakes game. And our clients are usually all in, having spent years building their businesses, burning the midnight oil and often risking financial ruin. If you’ve taken the decision to embark on a deal the consequences of getting it wrong can be painful and scarring.
So, whether you’re Boris, neck deep fighting a pandemic. Or, you’re in the trenches with your advisor doing a deal, here are 5 lessons from lockdown:
1. Don’t hang your hat on unrealistic targets… (100,000 daily tests, anyone?)
In any deal, having targets is key. Some of these are longer term in nature and will play out over several years. But some are shorter term, such as the forecasts covering the period between starting conversations with investors and closing a transaction. A period that can be several months in length. During this time investors will want to understand how a business is performing before they sign on the dotted line. Presenting an ambitious, hockey stick set of numbers is all well and good but if you’re missing these numbers at the heel of the stick then it raises questions over the rest of the plan. The solution is simple. Set these early targets so that they are reasonable and within reach. It’s much easier to sleep at night if you’ve hit your budget. As Matt Hancock knows all too well.
2. Are we clear? Staying at home vs staying alert…
The past few weeks has illustrated the importance of clear communications. When the message was ‘Stay at Home’ we knew what to do. When the message flipped to ‘Stay Alert’ it raised all sorts of questions. ‘Stay at Home’ was a strong and simple message. ‘Stay Alert’ was well intentioned but sowed confusion. So be clear, concise and appropriate in your communications with investors. Discuss and agree messaging with your deal team. At every stage of a transaction decide what the message to investors should be. As well as who should deliver it, how it should be delivered and when.
3. Practice what you preach… getting busted isn’t pretty
It doesn’t matter whether you are the Scottish Chief Medical Officer, the Secretary of State for Housing or a lovestruck scientific advisor. If you’re responsible for setting the rules, you should make an effort to follow them yourself. In our experience, the most successful Founders and management teams are those that live and breathe their brand and lead by example. Authenticity matters. Not just to customers but to investors as well. You must have absolute conviction in your story; and an unrelenting belief in your vision. If you don’t, how do you expect an investor to? And if you are unsure, then don’t bother with investors, they will soon suss you out.
4. Less is more… do we really need daily Government briefings?
Deal doing is a courting process. It’s an exercise of seduction. There are times where regular communication is required. And there are times when the silent treatment is a better tactic. Where stepping back and playing hard to get is more likely to deliver the desired outcome. Some think that regular and detailed communication is appropriate in times of crisis, as we are seeing from the Government’s daily briefings. But deal doers who say too much, too often can find themselves eroding value. You increase the chance of saying the wrong thing. And it dilutes the impact of the important messages. That piece of ‘good news’ that could swing a negotiation or improve terms. In short, don’t underestimate the importance of a communication strategy; being deliberate, precise and tactical with your messaging. Often this means that less, is more.
5. Make sure your modelling stacks up… Imperial College take note
Your 20MB beast of a financial model, built when Office 2010 was all the rage, may have been sufficient for ‘business as usual’. But when investment decisions are reliant on its output, will it stand up to diligence? Like the Imperial College team are finding out, if your existing model is being used to inform big decisions, it pays to have its workings and assumptions crash tested. This will ensure bugs and errors are spotted and fixed, well before investors start pouring over the numbers. Models we come across have often been cobbled together over many years, a patchwork from lots of different sources. Like a Frankenstein of the spreadsheet world… large, clunky and really ugly. Sometimes, it’s easier to just ditch the old model and build one from scratch. Whilst this might require an investment of time, effort and resource the longer term benefits are worth it. And as any sensible deal doer will tell you, a good model will pay for itself many times over.
That’s it folks, school is up!
Now, like many of you, we are looking forward to a time when we can get back to doing what we do best. A time when our clients can return to providing amazing experiences for their customers. Unconstrained by physical distancing, unrestricted by lockdown. A time when we can help them land life changing deals. A time when the outlook will be rosy, the FTSE rising and economies booming.
That time will come. And when it does we will be front and centre.
And in the meantime, if you’d like advice as you consider your next steps or you just want to break up the day with a chat, then shout. We’re all ears.