The Vector company offers its services around three main business areas:
CORPORATE FINANCE SERVICE
Preparing the company for sale
Service which precedes the sale of the company, oriented towards improving results, management processes and teams in order to create value, improve the conditions with which the company will contact prospective buyers and optimize the interests of shareholders
Sellside advisory services
Advice, planning and execution services in the sale of the company, structuring and managing the process, preparing all needed documentation, providing a valuation of the business and managing negotiations until successfully closing the transaction.
Incorporating new partners
Service oriented towards the incorporation of new partners to the capital structure of the company, whether through a capital increase or through the acquisition of a minority stake to the existing shareholders
Buyside advisory services
Advisory services based on defining the acquisition strategy, identifying potential targets, advising how to contact them and in the analysis process and valuation, and determining the basis for the negotiations and defining the business and industrial integration plan
Searching companies matching required criteria for a potential merger that would add value to the resulting group, advising in the exchange ratio and in other negotiations required to reach a successful closing of the proposed transaction
Searching potential partners to reach strategic alliances such as third party manufacturing agreements or setting up a new firm together with a local partner to enter new markets
Divestment of business units
Advising in the divestiture of non-core business units
Service based on determining potential synergies and economies of scale to be captured after the merger or the acquisition, defining the different plans to be implemented in order to fully benefit from the transaction and coordinating the different teams.
Advisory services to private equity firms
Advising PE firms in different aspects of the investment cycle (search and analysis of investment opportunities, in the investment process, in the definition of EBITDA improvement plans during due diligence or after acquiring the company).
Financing solutions and optimization of the company’s capital structure
Studying the optimal capital structure for the company, seeking financing and comparing price quotes to market value
Analysing and determining the strategy and the negotiation scheme for the debt refinancing process, stating the scenarios under which the company would not generate enough cash for debt repayment
IThird party independent valuation report on a company using widely accepted methodologies. To be used in the context of debt restructuring, ownership disputes in family businesses, for the Board of Directors….
Helping elaborate business plans for business projects requiring detailed financial projections, in the context of debt refinancing or capital raising
CLUB DEAL INVESTMENTS
A different investment model
The Vector company provides financial resources for small cap companies (sales between 10 and 40 million euros and EBITDA between 1 and 3 million euros) with high growth potential, partnering actively with the entrepreneurs and co-managing the company in critical decisions to maximize the value of the company, helping the company to achieve operational excellence, its market positioning, sales increase and preparing the company for the most suitable corporate transaction.
Our investments are addressed to companies with a viable business model seeking knowledge and capital to achieve their full growth potential.
The Vector company’s approach to investing is different from other financing resources given our focus in knowledge and our unique financing/investment scheme:
- We do not just analyse companies, we help them to redefine and improve its market positioning and increase its growth potential. We help them renew their growth and operational excellence plans with proven management methodologies.
- We are not a passive investor. On the contrary, we dedicate a significant amount of resources to implement and improve on a continuous basis the growth and management plans of the company, with active participation in the Board of Directors, Management Committees and improvement projects.
- Refining the financial model of the company to serve the shareholders and corporate management’s best interests , improving current and future value of the business
- Structuring a transaction that maximizes value to the owners and to the investors
- We invest in companies where there is significant room for operational improvement and to evolve its business model to a unique positioning
- We invest only in those businesses where our prior operating and business due diligence allows us to elaborate a detailed roadmap for the company and aligned with the vision and interests of the entrepreneur and owner to, at least, double the EBITDA figure in a short period of time.
- Once the investment is closed some of our team members will be directly involved dedicating one or two days a week to the company, ensuring the business plan is reached and offering their expertise to solve the needs of the Management Team (providing support in supply chain and operations, improving product positioning, strengthening the organisational chart and key job positions, improving the analytical data systems and providing solid background for decision-making, encouraging international joint ventures and international growth…)
- Our investors are successful businessmen, Spanish or foreigners that would like to diversify its investment portfolio, participate in new investment projects in sectors other than theirs, reaching an average target IRR of 20%
- With two different commitment levels: Ring I would be comprised of 7 reference investors, highly committed and involved in the investment policies and selection of preferential sectors. Ring II is comprised of around 30 investors, authorised by The Vector company, that will complete the investment tickets.
- Our value to the investors is based on our own expertise and that of our strategic partners to find potential investments with a superior risk-return proposition and operating in niche market with high growth potential
- Our focus in working in close collaboration with the companies we invest in to achieve their full potential and our ability for team work together with different types of managers and owners developed through the years, helps us reach a higher return to our investments
- We raise capital for each one of our Club Deal investments after having identified the company, having determined the potential for value creation and having defined the business and growth plan together with the owners of the company
Main aspects of our investment style
- Investment in attractive companies through a mezzanine debt instrument + warrant with the goal of becoming a partner in the business (not just simply a financing provider) and getting the companies to a new level in which they will be more attractive and visible for the financial markets (traditional PE firms, MAB, international listed companies,…) in a short period of time
- Focused in filling a market gap not fulfilled by traditional PE firms in relation to companies with EBITDA figures between 1 and 3M€ and get them to a level of 5M€ EBITDA figure
- Each transaction is structured through an investment vehicle in which members of the Club Deal will participate according to their preferences and their confidence in the project. Hands-on investment style aimed at value creation improving the operating EBITDA, helping evolve the business model to a unique positioning and maximize the potential for a corporate transaction, with the full support of the management team of The Vector company and of its strategic partners to create maximum value.
- 1x EBITDA investments on average with an investment period of 3 to 4 years
- Receiving the investment back (bullet debt + warrant) mainly through a corporate transaction although the owner could decide not to sell the company and repay the debt +warrant with its own resources.
DUE DILIGENCE FOR OPERATING IMPROVEMENTS
Las due diligence de mejora operativa son proyectos de revisión del negocio en sus distintas áreas (producción, compras, logística, organización, ventas, finanzas) con el objetivo de determinar las posibilidades de aumento del EBITDA operativo. Se realiza una revisión de las principales áreas de la empresa (Ventas y Marketing, Operaciones, Estrategia, Organización, Finanzas) desde un punto de vista operativo y orientado a la optimización de resultados:
Improvement measures in Sales & Marketing
- Evaluating and analysing profitability levels of clients and family products to serve as a base for decision-making
- Revising the cost system used
- Restructuring and rationalising family products distinguishing between own brand and third party products (managing product portfolio)
- Optimizing the launch of new products
- Selection of key markets
- Defining pricing strategies
- Defining efficient commercial discounts policies
- Designing the commercial plan
- Adequate salesforce sizing
- Optimizing the sales administrative processes
- Revising key commercial indicators
Improvement measures in operations
- Evaluating overall efficiency in production processes
- Programs to increment availability, performance and quality in production
- Revising the orders/production planning system
- Optimizing how to manage product shrinkage
- Program for maintenance costs reduction
- Continuous improvement systems
- Revising portfolio of suppliers and defining negotiation strategies to improve purchase conditions
- Workforce resizing across all company departments
- Implementing efficient logistics process and level of services, optimizing inventory levels and reducing warehousing costs
- Revising the company’s value proposition
- Understanding how the business could be broken into more profitable business units
- Market analysis and of key success factors
- Revising the strategic plan and validating its suitability according to the business model and management plans
- Adapting the organisational structure to the current situation of the company
- Revising responsibilities and policies of each department
- Revising governing systems on management
Improvement measures in the financial area
- Implementing improvement measures to working capital management
- Revising cash collection and payment and systems
- Revising financing structure
- Cash management plans
- Financial projections