IP is the pixie dust that can make your profits fly
•Download as PPTX, PDF•
1 like•145 views
Adam Blatchford, Associate at Equiteq, talks about about the benefits of IP and how you can get started on building your own. Whether your firm generates revenues of $20m or $100m, IP is what differentiates you amongst your competitors; ensuring clients buy your services.
Recommended
More Related Content
What's hot
What's hot (18)
Similar to IP is the pixie dust that can make your profits fly
Similar to IP is the pixie dust that can make your profits fly (20)
More from Equiteq
More from Equiteq (14)
Recently uploaded
Recently uploaded (20)
IP is the pixie dust that can make your profits fly
- 1. Confidential© Equiteq 2016 equiteq.com Growing equity, realizing value IP is the pixie dust that can make your profits fly
- 2. Confidential© Equiteq 2016 equiteq.com Equiteq is a M&A advisory firm exclusively serving the exit objectives of owners of consulting firms 2 What we do for our clients? Global presence Equity Value Realization Sale to a Strategic Buyer or Financial Investor Sell Value Creation and Sale Preparation Between 1 and 3 years prior to a desired transaction outcome Prepare Why are we able to deliver value to our clients? 50 people across 4 continents Global Buyer Relationships Regular contact with our database of global buyers Industry Experience Market Knowledge M&A Expertise Encompassing: Management Consulting, IT Services, Marketing Services, Engineering Consulting and HR/HCM Consulting Market Leader in Consulting Sector Founded by consultants who successfully grew and sold their own business NEW YORK LONDON SINGAPORE SYDNEY
- 3. Confidential© Equiteq 2016 equiteq.com Intro – What is smart scaling What is IP? Why is IP valuable? What should I do about IP? Key Messages Questions Contents of today’s webinar 3
- 4. Confidential© Equiteq 2016 equiteq.com Smart Scaling is ensuring business growth translates into equity value growth by avoiding mistakes and missteps
- 5. Confidential© Equiteq 2016 equiteq.com What is IP? IP is recorded knowledge that can be used to generate profit 5 IP to Deliver your service IP to Market your service IP to Run your business
- 6. Confidential© Equiteq 2016 equiteq.com Why is IP valuable? – to you, to buyers 6 Differentiation01 Leverage02 Scalability03 Risk Mitigation04
- 7. Confidential© Equiteq 2016 equiteq.com 01.Differentiation Standing out from the crowd 7 Deliver Value to Clients Command Higher Fees Outcompete Competitors Protect Market Position
- 8. Confidential© Equiteq 2016 equiteq.com 02.Leverage Using more junior resources to deliver higher quality work at lower cost 8 + Junior Resources Reduced CostIP Better Delivery + =
- 9. Confidential© Equiteq 2016 equiteq.com 03.Scalability Building the business faster, at a lower cost 9 Reduce reliance on expensive talent Therefore higher profits Faster ability to scale Benefits You & Buyers
- 10. Confidential© Equiteq 2016 equiteq.com 04.Risk Mitigation 10 People Risk Quality Assurance
- 11. Confidential© Equiteq 2016 equiteq.com How do I manage IP in my business to increase equity value?
- 12. Confidential© Equiteq 2016 equiteq.com What should I do now? Guided by your business strategy 12 01. Create Board Level Accountability 02. Involve People 03. Embed Process
- 13. Confidential© Equiteq 2016 equiteq.com Supporting profitable growth while mitigating risk Use more junior resources to deliver high quality work at a lower cost Align IP to your Strategy Key Takeaways 13 ACTION - Start the conversation
- 14. Confidential© Equiteq 2016 equiteq.com More resources 14 A free source of information, advice and insight to help you prepare and sell your consulting firm. Join at equiteq.com/equiteq-edge Or to speak to us, call UK +44 (0)203 651 0600 US +1 (212) 256 1120
- 15. Confidential© Equiteq 2016 equiteq.com
Editor's Notes
- M&a advisory – we only work with consultancies, people businesses that sell knowledge and expertise We support clients throughout the whole journey, building their equity value, through to preparing for sale and then selling, often over 3 or more years. Global business – all contenents, because the buyers we deal with are international, we need that range to deliver the best deals Mix of skills, consulting and M&A, started by consultants, lots of M&A people
- – fingers on buzzers
- Nit all growth is equal, you need to focus on building value as well as revenues, and profits – you can do both Thinking about what buyers want, – using the buyer lens to asses business decisions Great thing about IP – a win – so long as you make sure it is aligned to your strategy
- IP in broad sense – knowledge that has been recorded so it can be used and worked on by multiple people at the same time – Molten - is the physical representation of knowledge, ideas and concepts that have commercial value. 3 types – we focus on deliver – but will touch on others where they overlap - Types of IP buyers value – desirability vs. efficiency?? All about leverage, ability to scale (E.g. Accenture) It gives you superior consultants and delivery, which therefore provide competitive advantage (either in differentiaton, efficiency, leverage), which lead through to equity value and stronger profits. Also reduces risk Process maps Database of experts Links with Academics Support networks Methodology manuals Case studies Software tools
- Look at it in a different way now, in terms of the benefit or if you prefer the value, it provides to you, and also to a potential buyer 4 key things we will talk about in turn,
- (IP is the difference between selling bodies and selling a service) (Can also be the difference between selling a service and selling results?) YES - A key way that IP differentiates you if you use it to deliver more value to clients, so in significantly faster results or better cost savings, you can use IP to help you to deliver a superior service to the client YES - if your services (underpinned by IP) are delivering a clear and significant benefit to the client, then you will be differentiated, and that means in addition you can command higher fees for your services. You need to make the strategic decisions at a high level of how you are going to be differentiated, and then build the IP to support that, First that allows you to outcome your competitors – you utilise IP to build recognition in the market and with clients that you are the thought leader and the expert in your chosen space. That is differentiating, Then second that IP helps you protect your position in the market, because no one can do the work as well as you, as quickly as you can, or has the level of knowledge in a specific sector. By this point you are building barriers to entry, you become unassailable because no-one can argue that you are the expert, you have the IP to prove it, and why would a client go anywhere else? (you can see there is interaction between marketing IP, delivering IP, working together to achieve the differentiation) Importantly all of this affects your desirability to a buyer, you are not just a ‘me too’ kind of firm, you stand out and that is what buyers want, they of course go into DD and review figures and profits, but what first makes them stand up and take notice is what you do, and if it is interesting and no-one else can do it, then you are of interest and have potential to command a premium price at an equity event. .
- Talking about the Pyramid model – Accenture is the best example – very wide pyramid, of course there are nuances in your specific area, but as a general principle this is how consultancies need to be organised. Finders, minders, grinders Without IP that pyramid is just a deck of cards – you need to support those people and team members with a solid base IP, to underpin their work so that they are able to deliver the required services The way IP achieves that is Full knowledge of the firm available to junior staff – so they can Deliver a better product Cost less – (than a comparable more experiencd resource to deliver the same work) as you see on the screen - So raises the profitability! – the key benefit to your firm Benefit to the buyer – creating value Model is essential for larger firms in consulting, including buyers and to you, to achieve margins - if your operating model is a completely different shape you will be very difficult to integrate Profitability per consultant, up – key metric for many buyers So by delivering leverage, the IP makes you both more attractive to buyers and more profitable.
- Scalability Building the business faster, and more easily, at a lower cost Using IP to improve scalability is All based on the fact that Replicating a person is difficult, processes is easy In consulting we have it better than some industries,we don’t need to build new factories or machines to scale, so,, but scaling still relies on getting good people. That can be a limiting factor, whereas a firm based on IP is inherently far more scalable. Eases those limits – because the IP can be replicated in na way that people cant be Reduce reliance on expensive talent Training IP and deliver – train current people to do the work ‘Grey hairs’ – expensive, hard to find Subcontractors, - can cope with peaks or specialist requirements by supporting your own people to deliver using knowledge from IP (to reduce benchtime - your team pool can be more flexible, builds ability to take on a broader range of the work you pported by IP,) Therefore higher profits – good for you and buyers Secondly IP helps scalability by giving you Faster ability to scale – ( Faster onboarding Faster upskilling Less hiring risk -– less risk of mistakenly taking on someone who cant do the job, because you guaranteeing they can do at least part of role, because you are providing them with that ability through IP Benefits You & Buyers - Buyers wil want to take your services and roll them out across their client base,, if you have packaged IP that lets them do that, probably across their people also, ithen they can realise the benefits of that much faster. Which makes your firm more valuable to them.
- There are two areas of risk which IP can help you with, People Risk and Quality Assurance People risk is mainly the rsik of Key staff leaving We are talking about a reliance on any individual, that their leaving could mean your firm loses knowledge (how you do things, about clients, ertc.), or relationships, but you can mitigate that risk by packaging that knowledge into IP so it is retained even if they leave, or if god forbid, something bad happened to them. Protects your business, buy maintaining the methodologies, or CRM contacts, for example. IP helps with people risk in other ways Makes consutlants Want to stay – their job is eaiser, they have IP to support them, and they are providing more value to clients (motivational and disincentive to go anywhere else, as they woule be less effective) It also Attracts recruits to your firm– they see that you are differentiated (doing work in an exciting way that others cannot) and are attracted to it (consultants are curious and want to see their clients succeed. So it Allows you to attract, retain and develop high quality consultants – mitigates your staff risk Quality Assurance – Reduces the risk of failed delivery, You Can guarantee the quality of your firms work, because its based on IP, the delivery is consistent, it wont require rework, and it doesn’t rely on a single fantastic person to find a solution, it is relicable every time, and you know (and the client knows) that they are going to get the right standard of work. – helpful from a selling perspective as well, we are selling services, you cant go into a shop and touch or feel it before you buy it, its uncertain by their very nature, which some clients struggle with. IP provides more certainty around the value you will deliver. Tangible underpinning to intangible service
- You’ve heard about benefits of IP to you and buyers, the ways it can help your growth to be ‘smart scaling’ building equity value alongside revenue and profits. It all sounds great, I want it, but how do I get it? How do I manage IP to increase equity value? Fundamentally it must be Aligned to your strategy – that is the absolutely key, and all your other actions rely on that, otherwise efforts are wasted. that allows it to differentiate to work by aliging it to the key issues and hot topics in your industy, to market and client needs, it ensures supporting the right shape for the leverage by fitting it to the operating model laid out in your business plan, it makes sure it is focused on mitigating the risk which are most concern to your business So with that in mind, lets take a look at some specific actions.
- So here are some real actions you can take to begin nthe process of building valuable IP As I mentioned, everything has to be guided by your strategy. The way you create and maintain that alignment is by making sure there is someone at board level who is not only responsible but accountable for intellectual property, the management of it, the creation, the use, the communication, that has to be the first steo. Doesn't have to be their only role, you don’t have to go out and recruit a chief knowledge officer, but around that boardroom table, someone needs to stand up and say ‘I’ve got this covered’. That in turn creates the impetus behind it, that person is in charge of driving it forward for the good of the business, and to build your equity value. So they are Provide the governance, and the impetus, but of course they can’t do it all. You need to involve your people 2- most consultancies don’t have a stand alone R&D department, im not saying you should, but that innovation needs to come from somewhere, and that is your people, you have teams of smart people,. Talk to your people, see what is already in use, what interesting ways have they solved problems that you can package re-use across teams, most consultancies the innovation is incremental, it is day-to-day improvements, (its motivational to people, to have those conversations, show them that what they are doing in interesting and valuable to the business) . You are crowdsourcing the collective knowledge of your business and using it to build tangible value. But without the strategy, everyone does their own thing, you will end up duplicating effot, so that board accountability has to come first (these are not just randomly numbered, they are in order, first you create accountability, then you need to involve your people and create buy-in before trying to install processes) !. 3 but that is the next step, embedding the processes, and thats about creating a cycle of continuous improvement - Lifecycle of IP: Plan, Create, Communicate, Use it/Monitize (, Review/Retire You aren’t starting from mscratch, people will be using things already, you can think about beginning with an audit of existing IP as a start and plan how to improve and use it Some point Develop an inventory of IP to– accessible and easy or people ignore it, or worse, recreate it over and over Also Need to think about a knowledge management and transfer process, you are no doubt doing some of this already, so you can integrate this thinking into current proceses
- Start the conversation – at board level – making someone accountable - with your people – you have big teams of smart people out there with clients solving problems, ceating ideas. They are creating value in your firm, you need to capture that value, don’t just let it just drift away, nd dissapperar