Ephor Marketing Services BriefThe market opportunity is ripe for marketing services firms that create a scalablerecurring ...
Valuation ImpactThe marketing sector is highly fragmented, and rich in opportunities for consolidation and therefore attra...
Marketing Services Growth Barriers to Date:The key success factors/drivers for attracting institutional investment include...
P&L Today:P&L Opportunity:The P&L Needs Additional Products; “Don’t take a slice of the pie. Grow the entirepie through a ...
Exhibit: Top Operating Processes to BeInstitutionalized before Capital DeploymentWhat is the most economically efficient d...
Exhibit: Top Questions to BeAnswered by Management  I.   What elements of the platform are       missing to solve the valu...
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Ephor mso brief2010

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B2B marketing services market landscape for CRM, SaaS implementation, call center, contact center, market research, Internet marketing and related B2B marketing agencies

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Ephor mso brief2010

  1. 1. Ephor Marketing Services BriefThe market opportunity is ripe for marketing services firms that create a scalablerecurring solutions platform predicated on bundling and focused on a few verticals toensure economic efficiency and measured growth. See the Valuation Exhibit for detail of thewealth creation opportunity.Accordingly, Ephor Group desires to create a > $10M marketing services firm in the south central regionof the Americas.Marketing Market Opportunity Executive SummaryThe marketing sector is highly fragmented, rich in opportunities for consolidation and therefore attractingprivate equity investment. There is a large pool of un-invested capital seeking returns; and increasinglyactive corporate and strategic buyers. Transaction multiples are currently pegged around 4-8X timesEBITDA (pretax profit) and 2-5X times EBITDA for deals greater than $20 million for technology basedfirms and 1X to 3X net revenues for small, growth oriented labor intensive firms (based on Ephor Groupdeal sources, CapitalIQ and Thomson Financial data).Buyer Demand Trends & Drivers 1. Integrated Holistic Platform. 2. Digital Agency. 3. Mobile & Mobility.  Communications is one of the main drivers of new systems/tools implementations.  The Kelsey Group predicted a 130.5% growth rate for local mobile search and an 81.2% growth for overall mobile ad revenues by 2013. Mobile Website Requirements:  Site renders effectively  Well-optimized1 for mobile ranking factors  Optimzied for multiple devices1 Google Mobile Optimizer, MoFuse, and MOBIFY are great tools to help you easily create a mobile version of your Web site.Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046
  2. 2. Valuation ImpactThe marketing sector is highly fragmented, and rich in opportunities for consolidation and therefore attractive toinstitutional investment with the right portfolio of recurring revenues and a unique business model.There is a large pool of un-invested capital seeking returns; along with increasing number of active corporate andstrategic buyers. Transaction multiples for technology enabled businesses are 4 - 8X times EBITDA for scaletransactions, and therefore, for subscale transactions (<$20M) 1 to 3X Net Revenues (based on Ephor Grouptransaction comparables, CapitalIQ and Thomson Financial data).Valuation Roadmap Management Action Steps: 1. Validate the Platform & Portfolio Approach (Buyers, Offerings, Revenue Strategy) through partnering, alliances and acquisitions; and 2. Create “best-in-class” operating performance against KPI benchmarks.Key Success Factors Required to Create Wealth Resources Required StatusTalented People “A Talented Team” assembled and supported by industry leaders, domain experts, and strategic partners.Unique Business Model Model needs to be efficient, scalable and have clear differentiators in the marketplace and “be known”.Capital to Execute Useful Capitalization of the company to implement its growth strategy, by noted and competent investment and governess professionals.Routines Business plan supported by operations performing at BIC2 rates and the business model is refined and made economically efficient including all processes, measurements, and revenue methodologies.Factors Impacting Valuation (and thus Wealth Creation) 1. Quantity and quality of recurring revenues and the profitability of the platform; 2. Scalable operating infrastructure to ensure performance is maximized, cost-efficient and delivers on the full promise of the outsourcing value-proposition; plus 3. Company had best-in-class customer acquisition economics, has significant alternative distribution, and is realizing the benefits of having achieved “Branded Franchise Effects.”Valuation MultiplesCategory Price Revenue Multiple*Business Process Outsourcing 1.5 to 3.9XMarketing Systems Implementers 1 to 2.9XOutsourced Sales Provider 1 to 6XOutsourced Marketing Provider 1 to 5XMarketing Services 1 to 4XMarketing Technology 1 to 8X* revenue multiple depending upon how the business is classified (does not include pass through advertising)2 BIC = “Best In Class” 2 Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056
  3. 3. Marketing Services Growth Barriers to Date:The key success factors/drivers for attracting institutional investment include: 1. Validate and Create Raving Fans for each Vertical Market: Vertical Specific Solution Capability Practices 2. Implement Branded Recurring Revenue Model Suite of Products: Customer Lifecycle Portfolio Recurring Revenue Model 3. Validate Scalable Services Platform: Validate Key Operating Indicators such as > $250k revenue-per-employee and > $20k EBITDA 4. Offers Better Solution at Lower Cost than Alternatives 5. Create Strategic Optionality: Serve multiple industries, with multiple services, supported by multiple systems/tools 6. Validate Customer Acquisition Model: 1/3 new sales from referrals, 1/3 from alternative distribution. 1/3 from executives. 7. Validate Client Satisfaction: Retention > 3 years. 8. Eliminate owner or key employee dependence and single threadedness. 9. Ramp and scale of roles for all positions.How Do I Position My Business to Maximize Value? 3 Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056
  4. 4. P&L Today:P&L Opportunity:The P&L Needs Additional Products; “Don’t take a slice of the pie. Grow the entirepie through a Branded Platform.” 4 Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056
  5. 5. Exhibit: Top Operating Processes to BeInstitutionalized before Capital DeploymentWhat is the most economically efficient deployment of funds against the variouswealth opportunities and scenarios? I. Handicap (rank) the Buyers, Distribution & Channel Partners by revenue potential and ROI. i.e. What is the near-term (Early Adopter) market size (count # and annual revenue $) based on most probable distribution scenarios? II. Validate the customer lifecycle, portfolio offerings, and reengineering of the organizational design. Illustrative Growth Model: III. Acquire missing components detailed in the org. chart. 5 Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056
  6. 6. Exhibit: Top Questions to BeAnswered by Management I. What elements of the platform are missing to solve the value equation? II. What is the near-term (Early Adopter) market size (count # and annual revenue $) based on three (3) most probable distribution scenarios?III. What is the pricing/margin range and how should the offerings be packaged?IV. Scalability: What are the scale drivers and key milestones to create wealth? V. How are all investment and execution risks minimized? 6 Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056

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