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Similar to Precision Targeting Document Similar to Precision Targeting Document (20) 2. 1. About Cognitive
2. Fund Types – Overview
3. Fund Types – Detail
4. Investor Network Structure
5. Importance of Precision – Geography
6. Importance of Precision – Sectors
TABLE OF CONTENTS
2
7. Importance of Precision – Transaction Strategy
8. Importance of Precision – Transaction Ticket
9. Case Study
10. Other uses of the Cognitive Database
Annex: CCF Services
3. 1. ABOUT COGNITIVE
3
Cognition is "the mental action or process
of acquiring knowledge and understanding
through thought, experience, and the
senses.”
It encompasses processes such as
knowledge, attention, memory and
working memory, judgment and
evaluation, reasoning and "computation",
problem solving and decision making,
comprehension and production of
language, etc.
Human cognition is conscious and
unconscious, concrete or abstract, as well
as intuitive (like knowledge of a language)
and conceptual (like a model of a
language).
Cognitive processes use existing knowledge
and generate new knowledge.
• Cognitive is a cutting-edge Corporate Finance Wirm founded with
the objective of providing new and innovative Winancial services
on a global scale.
• The team has more than 60 years’ combined experience,
covering every function of the C-suite Winancial specter, and has
managed practically every major Winancial event in the life of a
corporate, SPV or investment vehicle.
• Cognitive Corporate Finance aims to be the most holistic, most
connected and most effective corporate Winance advisor in the
world in the Wield of Private Equity-like transactions*.
• Using our proprietary investors’ network, we aim to be so
intimately aware of the needs of institutional and corporate
investors worldwide that we can match – in real time – a well-
expressed funding need with the most relevant sources of
capital most likely to complete the transaction.
• We want to bring our clients the most relevant Winancial advice,
the optimal Winancial solution and the best and fastest service in
Winding capital for their corporate requirements.
*We deFine Private Equity-like transactions as any transaction executed outside
the realm of capital markets and listed securities.
5. 3. FUND TYPES – DETAIL
5
Transaction Strategy:
Majority or minority equity with
control.
Target Characteristics:
Stable cash Wlows, strong
management team, strong market
position, positive EBITDA
Typical Sectors:
Industrials, Business Services,
Energy, Healthcare, Consumer &
Leisure.
Avoid:
Loan to own, Distressed, Non-
Performing Loans, Seed/Early Stage/
Venture.
Financials, Real Estate
“PLAIN
VANILLA”
PE FUNDS
Transaction Strategy:
Majority or minority equity.
Target Characteristics:
Strong management team, Niche
position, Growth, International
Growth position, Replacement
capital
Typical Sectors:
Sector agnostic but prefer not to
invest in business that have high
CAPEX requirements such as
industrials.
Avoid:
Cash out, Seed/Early Stage
GROWTH
FUNDS
Transaction Strategy:
Minority Equity
Seed/Early Stage/Series A,B,C…
Target Characteristics:
Disruptive technology, Growth,
Strong management team.
Typical Sectors:
E-Health, Digital media, E-commerce,
Ed-tech, Nanotechnology, Agri-tech.
Avoid:
Stable cash Wlows, distressed, family
businesses, Spin offs, Replacement
capital.
INTERNET
& HI TECH
6. 3. FUND TYPES – DETAIL
6
Transaction Strategy: funding a
Claimant’s legal costs in order to
share in the outcome of the legal
decision (the “award”).
Target Characteristics:
Commercial litigation
Breach of contract claims
International arbitration
Professional negligence
§ Professional liability claims
§ Intellectual Property infringement
§ Patent infringement
§ Business defama<ons
Typical sectors:
Claimant can be represented by
either an individual or a company.
Sector is irrelevant.
Avoid:
Typical corporate Winance
transactions.
LITIGA-
TION
FUNDS
Transaction Strategy:
Majority, need control of the board
and management in order to carry
out extensive turnaround across the
whole value chain.
Target Characteristics:
Strong management Negative
EBITDA, Niche position, Buy out,
Family business.
Typical Sectors:
Completely sector agnostic including
real estate.
Avoid:
Cash out, Seed/Early Stage
TURN
AROUND
FUNDS
Transaction Strategy:
Acquiring assets or an operating
business in formal bankruptcy
proceedings, wither through
Target Characteristics:
Negative EBITDA, Niche position,
Buy out, Family business.
Typical Sectors:
Completely sector agnostic including
real estate.
Avoid:
Stable cash Wlows, disruptive
technologies, Seed.
DISTRESS
FUNDS
7. 3. FUND TYPES – DETAIL
7
Transaction Strategy:
Lend money on a senior basis, taking
guarantees in case of default.
Target Characteristics:
Strong management team, stable
cash Wlows.
Sectors:
Completely sector agnostic including
real estate.
Avoid:
Turnarounds, Restructurings,
Distressed, Negative EBTIDA, Seed
CREDIT
FUND
SENIOR
DEBT
Transaction Strategy:
Lend below senior debt, with Wlexible
interest rate structure often rolled
up with covenants.
Target Characteristics:
Spinoffs, Niche positions, Succession
issues.
Sectors:
Sector agnostic with no preference.
Avoid:
Turnaround, Distressed, Negative
EBTIDA, Seed.
CREDIT
FUND
MEZZANINE
• The investment strategies
described in the previous pages
draw only broad categories
which require further
breakdown to reWlect the wide
variety of capital types available
in the world.
• Moreover, we have not covered a
range of other – less well-known
– investment fund types such as:
agricultural funds, art and art
lending funds, search funds,
sports funds, illiquid funds, etc.
• This “zoological” tour of the
world of investment funds
serves to set the scene for the
need for high-precision,
technology-enhanced tools to
identify the relevant capital for
one’s company or project.
8. 4. INVESTOR NETWORK STRUCTURE
8
Personal contact:
Whom do we
know?
Geographic remit:
Where do / can these
investors deploy their
funds?
Sector preference:
Which sectors do
these investors
target?
Transaction strategy:
How do these
investors deploy their
money? Majority/
minority equity,
senior/ junior debt,
mezzanine, asset deals,
special sits, etc.
Transaction ticket:
What is the
minimum/ maximum
transaction these
investors will
consider?
Putting it all together…:
What is the indicative investment appetite for
the transaction proposed by our client?
• It has been estimated that there are
between 60,000 and 100,000
institutional investors in the world.
• To date, Cognitive has mapped over four
thousand of these Winancial and
industrial investors and we grow our
coverage on a continuous basis.
• To the extent that we are primarily Sell
Side advisers, we dedicate signiWicant
time, resources and technology to
understanding these investors’ detailed
investment speciWications.
• As a Wirst step, our mapping focuses on
the four criteria described in the
diagram, as these allow us to rapidly
identify relevant investors for a given
investment opportunity.
• However, in order to be as accurate as
possible when presenting an investment
opportunity to the market on behalf of
one of our clients, we strive to go into as
much detail as possible, as we describe
in the following slides.
10. 5. IMPORTANCE OF PRECISION– GEOGRAPHY(Cont’d)
10
Europe
{1,804 investors}
• Within each continent, Cognitive seeks to identify as precisely as possible the speciWic region(s) and countries of
focus for each investor.
• Some funds claim to be pan-European, but in fact – although allowed to invest all across Europe – only invest in
selected countries.
• Other funds have clearly delineated regions wherein to deploy their capital: Western Europe, Southern Europe,
DACH countries, Central and Eastern Europe, or Nordics.
• Other ways of breaking down geography – like those of Litigation Funds, for example – include the nature of the
legal system: Civil law countries, Common law countries, countries where bilateral investment treaties are in force,
etc.
• Other funds – like Real Estate funds – focus on primary cities / gateway cities vs. secondary cities, city vs. beach,
premium areas vs. low-income areas, etc.
• There is no limit to the degree of precision one can reach.
Switzerland
{963}
Poland
{890}
Germany
{1,107}
Italy
{985}
France
{1,055}
Sweden
{912}
United Kingdom
{1,195}
Spain
{1,124}
12. 7. IMPORTANCE OF PRECISION– TRANSACTION STRATEGY
12
Majority equity
Minority equity
Loan – Mezzanine
Loan – Senior debt
Loan – Junior debt
Project Winance
Special situations
Loan to own
Asset deals
Litigation
Structured Winance
Real estate – Core
Real estate – Core plus
Real estate – Value add
Real estate – Development
• In addition to the transaction strategy, it is important to know what asset classes the investors are allowed to enter into.
• The majority of PE-like funds are not allowed to invest in pooled investments or other investments.
• Funds of Funds typically cannot make direct investments into a company or projects.
• Corporate investors usually look for 100% straight acquisitions.
Funds of Funds
(239)
Private Equity-
like Investors
(3,449)
Target Companies / Assets / Opportunities
Corporate Investors
(401)
Endowments
(32)
Family OfWices
(236)
• Through its daily contacts with institutional investors, Cognitive has identiWied 15 broad transaction strategies implemented by these
investors, further segmented by sub-strategies, e.g. minority investor vs minority investor with a need for a controlling stake.
• For each of the ≈ 4,000 institutional investors in Cognitive’s network, we not only seek to understand the precise transaction strategy for
each, but seek to capture as much detail around the metrics and dynamics of each: e.g. distressed with minimum 50% IRR.
• This information is crucial, as the criteria for rejection are numerous, and there is no greater waste of time than talking to the wrong
person.
• By way of example, a debt fund
providing junior debt would never
consider an opportunity where the
client is seeking to exit the
business by selling a majority
stake. It is important to know this
information prior to making any
contact with investors.
14. 8. IMPORTANCE OF PRECISION – TRANSACTION TICKET
14
• The amount of capital an investment fund puts to work is a direct function of its Assets Under Management, combined with its need
to diversify its investments across a portfolio.
• For corporates, the investment ticket size varies according to criteria that are a mixture of hard and soft: the size of its own balance
sheet, the strategic importance of a given market, cash available combined with availability of acquisition Winance, etc.
637
1954
2372
1265
446
Investment Sizes
Micro
Small
Medium
Large
Macro
• An investment fund with A.U.M. of, say, €50m will make around 10 to 15 acquisitions of €3m to €5m.
• Conversely, an investment funds with A.U.M. of €5bn is unlikely to make transactions below €100m (if that “small”).
• Other considerations can impact the transaction ticket a fund is capable of examining:
• A “small” fund may have co-investors who can invest alongside them and “beef up” the amount of capital it can put on the
table
• Similarly, a “large” fund may be able to enter into a “small” transaction because one of its Limited Partners is looking to do
smaller tickets.
• Prior to making contact with institutional investors, it is important to know how deep the pockets are, and most importantly,
whether or not the transaction the company proposes matches with its range of possible investment criteria.
Macro
Medium
Large
Small
Micro
EUR .1-1m
EUR 1-10m
EUR 20-50m
EUR 50-200m
EUR 200m+
16. 10. OTHER USES OF THE COGNITIVE DATABASE
16
Company
Inv. Fund 1
Inv. Fund 2
Inv. Fund 3
Inv. Fund 4
Inv. Fund N
Portfolio Company 1
Portfolio Company 2
Portfolio Company 3
Portfolio Company 4
Portfolio Company N
Potential JV with Partner
Client
Supplier
Funds with portfolios in the relevant
sectors and geographies for the company:
Cognitive works primarily as a Sell
Side advisor, meaning we work
with companies looking to raise
capital, and guide them to the most
relevant source of capital for their
project.
This being said, our database offers
other functionalities for companies
looking 1) to acquire other
companies or 2) to Wind commercial
or JV partners.
For a company looking for JV
partners or clients, or for an
investment fund looking for
opportunities, we can Wilter our
database and identify such
opportunities in the portfolios of
the funds in the relevant sectors
and geographies.
In an investment universe of over
4,000 investors and with an
average portfolio size of 5
companies, our network
infrastructure covers around
20,000 companies.
• Cognitive can assist any company looking for JV partners, clients or suppliers in a
given country / sector to Wind relevant matches, as well as to put them in direct
contact.
• The dynamics of such an exercise are substantially different from all the above-
mentioned Sell Side precision targeting, but is equally powerful and fast.
17. ANNEX. CCF SERVICES
17
• Practically every event in the life of a company has a Winancial dimension, impact or consequence.
• The table below gives some examples of the work we carry out and a sample of the Winancial events we help our
clients address:
Financial Event Diagnose Design Deliver
Fundraising & Financing • Formalize Corporate Strategy
• ProWit & Loss Forecasts
• Cash Flow Forecasts
• Design Financial Instrument
• Investor contacts
• Negotiation and closing
Corporate Disposal • Vendor Due Diligence
• P&L and Balance Sheet risks and
impacts on price
• Pricing strategy and mechanism
• Buyer search
• Investor contacts
• Negotiation and closing
Real Estate Disposal • Vendor Due Diligence
• Documentation
• Investor returns and pricing
• Buyer search
• Investor contacts
• Negotiation and closing
Acquisitions • Growth and acquisition objectives
• Value proposition of buyer
• Acquisition and approach strategy
• Shortlist
• Contacts and approach
• Negotiation and closing
Mergers • Understand nature of proposed
transaction
• Calculate upsides & risks
• Negotiation strategy
• Acquisition options
• Negotiation and closing
Investment & Business Cases • Target review • Solution design • Execute
• Negotiation and closing
Restructurings • Nature of problem
• Cash Wlow forecasts
• Restructuring plan
• Financial solution
• Execute and restructure balance
sheet
• Negotiation and closing
Financing Growth • Design marketing & sales growth
plan
• Estimate Winancing needs: Capex,
working capital, other
• Design Winancial instrument
• Obtain funding
Other Financial Event • Understand nature of problem
• Calculate impact
• Design a solution
• Calculate need for new money
• Execute
