What Is Our Investment Rating Model?
In order to save our investors time and to ensure that they are presented with the best investment opportunities we use our proprietary investment rating model.
This model is focussed on core investment fundamentals. It combines our Partners extensive practical experience with qualitative and quantitative assessment methods.
What Is Our Investment Rating Process?
Assess – Each investment opportunity presented to us is subjected to our proprietary investment rating model without exception.
Our investment rating model is based on what we feel are the most important aspects of successful business and therefore successful investment. We assess areas such as:
- type and stage of business;
- history of business;
- industry and market position;
- management experience;
- shareholders;
- geography and demographics;
- points of difference;
- intellectual property;
- business assets;
- financial assumptions, results and forecast;
- funding requirement;
- business plan and strategy;
- valuation; and
- exit options.
Score – We analyse all of the above factors in relation to the investor offering, terms and conditions of investment, funding requirements and use of funds. These areas are scored individually and then weighted to provide a holistic rating. All Partners are involved in this process and a unanimous decision is required to progress.
Accept or Reject – The investment opportunity is given a red, amber or green light. Red means rejection. Amber means potential rework then resubmit. Green means pass and present to our investors.
In short, if it passes our extensive investment rating model, Dequity Partners will stand participate, support it and introduce it to our investors. At this point we have developed an Investment Memorandum and Business Plan.
In our experience, around 95% of investment opportunities presented to us fail to pass our investment rating model. Some fail the first time and with some adjustments, reorganisation, gap plugging and negotiation pass second time around. It’s a tough system but makes life easier for our investors to make a decision.
Rating Model Benefits
There are a number of benefits for our investors. These include:
- Clarity of investment fundamentals;
- Only investible deals are presented;
- Faster due diligence; and
- Faster decision making.
