What do most investors Look for in a Company?

  • Impressive market share in a sector that is booming. An organization with the ability to gain more market share in a growing market is always a good bet compared to a small company in a niche market. Although laser like market focus of a niche company is great to see, multiple complementary and growing services in multiple verticals and markets is obviously better at reducing the risk of any investor.

  • Equity ownership of senior Management. Investors are always more interested in a business where the management also has a significant percentage at stake in the business or “skin in the game.” This builds the confidence and credibility that they, the investors, are not going at it alone.

  • Top Quality Management. Investors often look for top-quality management in a business. In fact, a company can only be as good as the strength of management and this comes from the top-down. Management with a track record of successful ventures always works best for potential investors.

  • Ability to Effectively Acquire Other Businesses. The ability to acquire and operate other businesses is a great feature for any company. Such companies are often called “platforms” and investors come calling when they are looking to “bolt-on” a potential target company in a financial roll-up and arrive at a 1+1=3 scenario.

  • Products and Services with a clear Edge. Investors like to identify companies that are clearly better than their competitions in one or more functional areas. New and modern services that are showing growth are always preferred to legacy products that have already matured.

  • Modern trends and technology. The trend is your friend especially when it comes to an innovative product or service addressing the rapidly growing and tech savvy 25 and under market. Innovative technology can also exist in the production line or customer service or in any functional area and this creates a competitive advantage for such companies.

  • Generates superior Returns on Investment. Companies with a track record of great returns on investment are the go-to when multiple investment options are available. Being able to present such success stories from days of old should be top of mind.

  • Low Expenses or lean operations. Reduced cost of operating means higher competitive value and in difficult times, an organization that can minimize expenses can withstand most challenges and live to fight another day. There is no shame in describing your penny pinching and boot strapping ways.

  • Impeccable Financial records. A great balance sheet is an important tool that determines the chances of a company in difficult times. Being able to not completely depend on debt or equity from additional investors in case of future needs is always a good thing for both the company as well as for the investor.

  • Global Track Record. The ability to operate globally has multiple advantages including a much larger client pool as well as a buffer from regional or national issues having a negative impact on the business. The labor pool in such int’l diverse businesses is also usually considered a plus.

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