Investment Highlights for My Company???

Taos Cows
Taos Cows

I’m writing to this blog on CSF’s from Taos, and wanted to share some of the gorgeous scenery with you.  It’s only for a few days, so enjoy.

Call it what you may, but Critical Success Factors (“CSF’s”) are essential to any presentation that describes your company.  CSF’s are usually written by your Company’s strategy group, while Investment Considerations are written by your company’s investment banker.  All of these point to the same list.

  • CSF’s or Critical Success Factors;
  • Certain Investment Factors;
  • Investment Considerations;
  • Investment Highlights
  • Highlights (Simply)

These are what you consider to be the keystone to your Company’s identity.  They are also the anchor to your Company’s presentation.  CSF’s are always one of the first three slides, and either the last or the next to the last final slide of your Company presentation.

Because CSF’s are ubiquitous in any company presentation, do not make the mistake of thinking that they are fluff.  Managements spends hours formulating, tweaking and wordsmithing these points.

Still, CSF’s are somewhat formulaic.  There are between five and six points that always include:

  • Market Leader;
  • Defensible Market Position;
  • Growth Market;
  • Management Depth

The Market Leader must be a leader in some sense:  market share, technology innovation, process, cost, quality of product.  This is a self-defined term, that should be obvious once it is articulated.

Defensible Market Position means that a direct copycat copy is not do-able or ill advised.  Maybe there are patents, maybe there are trade secrets, maybe it’s know-how, maybe it’s the creative, focused, culture and organization the Company has built.  In technology companies, the phrase most often used is “proprietary technology.”  It may have nothing to do with technology, even if you are a tech company:  too difficult to copy, too expensive to duplicate, illegal due to patents, know how or process.

The Growth characteristic is essential in the presentation in the companies I deal with.  But you can define growth however you want.  Though it may be relatively small today it is a definable segment that is experiencing hyper-sonic growth.  Please do back up your statements with third party verification, be it from Dataquest, Frost & Sullivan, IDC, or another market research firm de jour.

The Management bullet may seem gratuitous, but it points out what is important about your particular management team.  Is it tenure at the Company?  Were they founders?  Do they have management experience with another well thought of company in the industry?

When Seeking Alpha wrote on IBM[1], they listed the Investment Highlights as:

  • Changing with the times
  • The switch to a services company has resulted in growing margins
  • Increasing net income has led to free cash flows, cash generation and shareholder returns
  • Solid Balance Sheet

Since Seeking Alpha wants to sell stock, they focused on the financials and less on how IBM got there.  You have a much broader perspective.

Amazon’s CSF’s are a combination of things:   distribution system, computer technology skills and expertise, low prices, an eccentric founder . . .

We could go on and on with Companies and their investment highlights.  But it’s time to turn to your own Company.  What are your Investment Highliglhts?

What CSF’s are you going to focus on when you decide to sell your Company?