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Post-investment support includes hands-on support that investors and support companies are deeply involved in management, and advice-based support focusing on advice and suggestions.
The biggest difference is how to engage in real-world business practices.
Hands-on support is easy to face a company with a lack of executability, but it can also increase business経営 and short-term outcome pressure. It is important for investors to check whether they are only funding or practical support.
First Con まず
The difference between hands-on support and advice support is the degree of involvement in management.
| 項目 | Hands-on Support | Advice |
|---|---|---|
| agement | High | Low |
| Business | Yes | Basics are proposed |
| Decision Making | may be deeply involved | Management Team |
| Business | Early growth, confusion, lack of execution | A company that wants to compensate for self-propelled companies and expertise |
| Main risks | Management Interference, Short-term Output Pressure | Possibility to end |
Which one is better depends on the company’s condition.
What’s important is that it helps to compensate for functions that are missing in the company?
Hands-on Support
Hands-on support is the support that investors and supporters are involved in the management and practices of the investee companies.
PE funds, VCs and business companies may be used for investment and regeneration support.
Specifically, we have the following support:
- Participation in Management Meetings
- KPI Design and Progと Management
- Support
- Improve sales structure
- Strengthening financial management
- DX and business improvement
- Disp of Officers and Specialized Personnel
- M&A and funding support
It is not only advised that it is better to do this, but also features a point of stepping into the execution stage.
What is advice support?
Advice-based support is a support that proposes directions and options.
The management of the company is on the corporate side, and the external supporter is involved as a counselor and specialist.
Examples include:
- Business strategy proposal
- Market analysis
- Funding Advice
- Proposal of financial improvement
- Organizational issues
- Walls for Managers
It is close to consulting, and it is often the responsibility of execution of business.
Two differences
If you organize two differences, you can:
| Comparison | Hands-on Support | Advice |
|---|---|---|
| Purpose | Change your company to run | Increase the quality of decision-making |
| Depth of support | Easy access to field, management, and human resources | Strategies and点s |
| Speed | Possible to move fast | Depends on the execution power of the management |
| Impact on corporate culture | big | Smaller |
| Liability | Flexible | Easy to be limited |
Hands-on support is easy to understand that it is “support to move together” and “support to create ideas”.
Why Hands-on Support is Important
Businesses may not be able to execute even if the strategy is correct.
Especially for companies and small and medium-sized enterprises who are trying to grow, the following problems are likely to occur:
- Management department is weak
- No hiring
- Business Processes
- Rough financial management
- No KPI
- Managers are on-site
In this case, the company does not change simply by pro strategies from outside.
By creating KPIs, hiring, 管理 sales management, and checking progress in the monthly stage, improvement will be easier.
Benefits of hands-on support
The advantage of hands-on support is that it is easy to run.
| メリット | 内容 |
|---|---|
| ution | Find a company that lacks human resources and management processes |
| Make decisions faster | Helping external shareholders and experts organize their arguments |
| Management system | Easy to maintain KPI, financial, conferをing and internal control |
| Easy to invest in growth | Easy to embody adoption, sales, M&A and DX |
In particular, PE funds need to increase corporate value within the investment period, so support is easy to work.
Benefits of hands-on support
On the other hand, hands-on support hasメリットs.
| デ | 内容 |
|---|---|
| Increase business経営 | The freedom of founders and existing management |
| Short-term output pressure | IPO and IPO have been conscious to improve profits |
| Culture friction | Intervention of external human resources may result in an internal rebellion |
| Cost reduction dev | Risks that prioritize short-term profits than growth investments |
Hands-on support can greatly change the company, while increasing the burden of change.
If the purpose of management and support is shifted, the reform may not proceed well.
Benefits of advice support
The advantage of advice-based support is that the company has a high degree of freedom.
| メリット | 内容 |
|---|---|
| Maintaining the efficacy of management | The final decision is easy for companies |
| Easy to protect your culture | Low外部 intervention from outside |
| Expertise | Compensate for market, finance, legal, and human resources |
| Available only when needed | Easy to incorporate external knowledge for each issue |
If you already have a strong management team and have a strong ability to perform, you may be more likely to have advice.
Demerit of advice support
Advice support does not lead to outcomes unless the advice is executed.
The following is a common problem:
- Finished and not executed with good suggestions
- There is no person in charge even if you know the issue
- The management is busy and the improvement is not progressing
- External advice does not match the actual situation
Advice support requires the ability to run on the company side.
For this reason, if you are a company with a confusing management or a company with a weak management system, you may not be enough to advise.
Which is better?
Which one is better depends on the company’s condition.
| Company status | Support |
|---|---|
| No control over rapid growth | Hands-on Support |
| Management is confusing | Hands-on Support |
| The main business is strong but lack of expertise | Advice |
| The management team can run on their own | Advice |
| Business revitalization required | Hands-on Support |
| Search for new markets | Advice |
The depth of support should be adapted to the lack of the company.
Even if you put only advice on a company that does not have enough executability, it is difficult to change. On the other hand, excessive intervention to a company that can be self-propelled may damage the freedom of management.
Points to be considered to investors
When you see investment news, check the fact that you invested, as well as the details of your support.
The following points are:
| ation | Reasons to See |
|---|---|
| Is there a staffing service? | Understand the depth of management involvement |
| Join a Business Meeting | Possibility to be involved in decision making |
| Do you have practical support? | Improve adoption, sales, finance, DX, etc. |
| funding | Easy to depend on the company's execution |
| Is there an exit strategy? | Materials that consider short-term output pressure |
Even though it is written as "capital alliance", "fund support" and "growth support" in the heading of the news, the actual contents differ greatly.
To think about the future of the company, you need to see the depth of support.
Hands-on support is a support for investors and supporters to be involved in business practices.
Advice-based support provides direction and expertise, and management assistance is the support left by the company.
It is important not to be superior, but to meet the company's condition.
When you look at investment news, check whether it’s only money or practical support.
Depending on the depth of support, the possibility of corporate growth and the burden on management will change.
出典
- Investor.gov "Private Equity Funds": https://www.investor.gov/index.php/introduction-investing/investing-basics/investment-products/private-investment-funds/private-equity
- SEC "Private Funds": https://www.sec.gov/resources-small-businesses/capital-raising-building-blocks/private-funds
- Investor.gov "Research Before You Invest": https://www.investor.gov/research-you-invest