Atlasview Equity Partners

We are honoured to be included in Axial's 2024 Technology Top 50 List!

Our latest newsletter issue is live! We The Porter's 5 Forces Analysis and how we utilize it as PE investors. Check it out here: https://lnkd.in/dXtN8Zvi

Congrats to our clients Viostream, Atlasview Equity Partners and Bloom Equity Partners on their sale to Banyan Software. Wishing all the best for the future, Bart Macdonald Jay Vasantharajah Paul Vecchiato. For SCD Advisory, 2nd deal in the software sector in 8 months.

As the saying goes, revenue cures all ails. The first value-creation opportunity Atlasview looks for in a business is organic revenue growth. There are often low-hanging fruits to increase the top line without needing to invest additional capital. Here are the 5 value-creation levers, in order of priority for us: 1) Pricing Optimization We love businesses that have a high degree of pricing power. Increasing prices is a surefire way to grow revenue, improve margins, profitability, cash flow, and create value. Beyond simply increasing prices, we often find opportunities to change the pricing logic to better match the value customers get from the product. This might mean tying pricing to usage, cost or time saving, revenue generated, or adding additional fees for various extras. 2) Customer Expansion Sell existing products to existing customers. It’s always easier to sell to your existing customers. Businesses often have a portfolio of products, but most of their customers use only one or two products. Getting customers to purchase multiple different types of products from you, aka cross-selling, is a fantastic way to increase the share of wallet and the stickiness of customers. Another form of customer expansion is to get your customers to buy more (or better quality) of what they are already paying for, aka the upsell. Whether it is buying more volume, usage, or a higher tier of product/service, all are ways to increase customer contract value. 3) Market Penetration Acquire new customers in an existing vertical. We love businesses that focus on a single vertical for many reasons - one of the main reasons is that customer acquisition is far more efficient. If the business has a long history of excellence within a single vertical, this should result in a high sales/marketing ROI. We look for opportunities to revamp go-to-market initiatives to generate new leads. Initiatives may include cold outbound, search engine optimization, email marketing, and paid advertising. 4) Market Expansion Expand into new customer verticals. Perhaps there are adjacent verticals that would find significant value in the business’s products. This might make logical sense if a business has already maxed out on its core vertical (where the 3rd point above may not yield any results). This could also entail geographical expansion. Perhaps there is less competition overseas or in another region, which may result in a great ROI. 5) Product Expansion Develop new products to offer both existing and new customers. This lever comes with the greatest risk as capital investment is required to develop new products. Not to mention the added risk of uncertainty on whether these new products will sell. In these scenarios, we look for a level of pre-commitment from existing customers for new product development. As we've previously outlined in our approach to organic reinvestment, we want a clear and measurable payback period.

Our latest newsletter issue is live! We discuss 5 Value Creation Levers To Increase Revenue. Check it out here: https://lnkd.in/gSxgXZMn

Our latest newsletter issue is live! We discuss why we love vertical niche businesses. Check it out here: https://lnkd.in/gKxfPXC2

Our latest newsletter issue is live! We discuss common non-financial reasons owners choose to sell their businesses. Check it out here: https://lnkd.in/g_kh6YGh

Very exciting to have Atlasview Equity Partners ranked within the top 50 technology investors!

At Atlasview we generally prefer reinvesting free cash flow/capital into inorganic growth (M&A, add-on acquisitions). But sometimes we uncover opportunities for substantial reinvestment into organic growth as well. For the types of companies we specialize in, organic reinvestment generally falls under two broad categories: 1) Research & Development This includes developing new features, functionalities, products, and modules to attract new customers or generate more revenue from existing customers. Also known as growth capex R&D. Return on investment for growth capex R&D ultimately comes down to how costly the development is (driven by difficulty/complexity), and how much customers will pay for it once it's complete. We prefer to get a level of commitment from existing customers before pulling the trigger (and in some cases, a customer might be willing to pay for the entire cost of the new development). 2) Sales & Marketing Many might view S&M as simply opex, but there is an argument to be made that it could be considered "growth capex". S&M spending enables us to acquire customer contracts, an intangible asset that generates future revenue. Return on investment for S&M spending boils down to the cost to acquire a new customer (CAC) versus the lifetime value, specifically the total gross profit, a new customer generates (LTV). 3.0 is considered to be a great LTV to CAC ratio, but the time period should also be considered. If we can spend $1 in advertising today and generate $3 within 2 years, that is an incredible return. But if it takes 10 years to generate that $3, we might be better off allocating that $1 elsewhere. Payback period Payback period (how long it takes to make 1x our investment) is how we decide which organic initiatives (if any) we should reinvest capital in. It will dictate how much capital is required for growth, and how risky the organic growth initiatives are. The longer the payback period, generally, the more capital we need and the riskier the investment is. Ideally, we want payback periods of 12 months or less on organic reinvestment initiatives. Money costs money, so any reinvestment (organic or inorganic) is always measured and compared against returning capital back to debt and or equity holders.

Our latest newsletter issue is live! We discuss organic reinvestment initiatives and payback periods. Check it out here: https://lnkd.in/gmvMyphJ