Pitch Perfect: Fortissimo’s Investment Playbook

Seeking investment from a private equity fund can be like entering unknown territory. Gearing up to pitch to a group of private equity investors can indeed be daunting. Central to the success of the pitch is the pivotal question: “What should we emphasize?” It’s a critical consideration, balancing the need to showcase your company’s strengths while remaining transparent and addressing potential concerns.

In this article, we explore the complexities of pitching to private equity, offering practical guidance for navigating this challenging terrain. From understanding the distinctions between venture capital and private equity to uncovering what Fortissimo seeks when evaluating potential investments, our aim is to provide clarity and direction. Moreover, we will define what lies beyond the pitch and what to expect as a Fortissimo portfolio company.

First, let’s briefly recap the ecosystem of funds and differentiation of Private Equity. In the Israeli market, there are primarily two types of investment models:

Venture Capital

Private Equity

Fortissimo’s investment focus

Since the inception of our first fund in 2004, Fortissimo has invested in over 60 platform companies and more than 45 add-on acquisitions. Our investment strategy focuses on buyouts (70%) and special situation growth (30%).

While it is not possible to generalize our evaluation criteria into a single formula or go/no-go checklist, we focus on companies with substantial revenues (ideally with a solid recurring revenue model), cash-generating performance (or anticipated positive cash flow within the next 18 months), pivotal phases, and an inflection point for a new organic growth trajectory. Additionally, the availability of a significant stake in the company is crucial.

Our investments span a wide range of industries, business models, and company life stages, with each company evaluated on a case-by-case basis.

Preparing your perfect pitch

As you prepare to present your company to Fortissimo, it’s crucial to grasp the key factors that catch our attention and drive successful investments.

  1. Start your pitch with a concise overview, outlining the company’s current status, core challenges, and the compelling reasons driving the pursuit of a deal.
  2. Demonstrate openness and transparency when addressing challenging questions to generate trust and credibility.
  3. Present a compelling story of the company’s development and explain major changes in performance.
  4. Outline current executional bottlenecks and propose viable solutions to overcome them.
  5. Showcase growth potential with the goal of achieving a performance enhancement of at least x3 in the coming years. Prepare to present supporting data and assumptions, such as organic market growth, pipeline projections, and strategic partnerships.
  6. Emphasize the company’s differentiators, barriers to entry, and the reasons for its success amongst competitors. Focus on articulating what sets the company apart and why it succeeds where others may fail, addressing the question: “What is our unique selling point?”

What to expect as a Fortissimo portfolio company?

With Fortissimo on board, we work together with the company’s management to set and achieve ambitious goals. Several key principles can be described as common ground in many of our investments:

Access to talent

Leveraging our longstanding presence in the Israeli and International business community, we have cultivated an extensive network of C-level executives and advisors. They offer support and, in some cases, accept roles within the company to drive its growth. While not all investments necessitate changes in management, we often provide support in areas that require improvement.

For example, when Fortissimo invested in Kornit Digital, the company was led solely by its founder with a lean management structure. To support its aggressive growth plan, we promptly strengthened the company with key positions (such as COO, VP Sales, and others). As the company progressed towards its IPO, a seasoned CEO was recruited. All changes were made in conjunction with the founder, who maintained an active role on the board, ensuring a smooth and successful transition.

Hands-on approach

Fortissimo’s board representatives engage with the CEO and management regularly, to review recent company performance and developments. We often act as a forum for brainstorming with the management and take an active role in corporate development initiatives.

Effective decision making

Our comprehensive understanding of the business and market dynamics, coupled with our trust in leadership and continuous monitoring of portfolio companies, allows us to significantly improve the pace and effectiveness of decision-making processes. This often replaces lengthy and tedious board meetings with a streamlined go/no-go procedure.

This can be demonstrated in the case of our portfolio company CTS (a leading healthcare player in Israel), where we swiftly divested the pet division within a month after acquisition following a rapid strategic sell/build process. This strategic move allowed for increased focus on other core business divisions and led to a notable improvement in overall performance.

M&A capabilities

We supplement organic growth strategies with M&A initiatives, often positioning our portfolio companies as platforms to capture market share and expand their core offerings both vertically and horizontally. We actively support management in identifying and evaluating potential acquisitions.

For instance, the acquisition of Sugat, one of the leading dry food suppliers in Israel, by Salt of the Earth, a sustainable sea salt solution for the global food industry, led to the creation of a platform that later expanded through additional acquisitions and enjoyed significant operational synergies.

Fortissimo’s in-house value creation team

Complementing the support from the investment team throughout the company’s journey, Fortissimo provides expert  consulting in core corporate functions such as Operations, Marketing, Procurement, ESG, BI, HR and beyond. This targeted support empowers our portfolio companies to effectively tackle major pain points and areas for improvement.  

Looking ahead

Overall, whether you are crafting a perfect pitch or exploring the path forward with private equity, securing an investment from Fortissimo promises a journey marked by collaboration, growth, and opportunity. While a company may not currently align with our fund’s investment criteria, it may do so at a later stage. Numerous examples exist of portfolio companies with whom we engaged over several years before making an investment. Feel free to reach out to any member of our deal team to further discuss and explore ways to generate a meaningful partnership.

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