Management Presentation

What is a management presentation?

Management presentation (in German: Managementpräsentation) describes a meeting in which the management and other executives of a company present the company in depth to selected prospective buyers or investors and answer their questions. The term also stands for the presentation document on which this meeting is based.

In a company sale, the management presentation is a fixed step of the auction process, in which several prospective buyers bid against each other on a fixed timetable. It follows the teaser, the information memorandum (the detailed written description of the company) and indicative, that is, still non-binding, offers. The bidders on the shortlist are invited, usually in parallel with the opening of the data room with the review documents. Funding rounds also know a comparable meeting in the review phase, when an investor goes deeper after the first conversations. On the seller's side, the presentation is usually organised and moderated by the M&A adviser who supports the sale.

Timing and purpose of the management presentation

For the bidders, the management presentation is the first direct impression of the leadership team and often the occasion to decide on further review costs. Afterwards, they generally instruct law firms, auditors and technical experts to carry out the in-depth due diligence, the review of finances, law, taxes and technology. At the same time, they align the financing of their offer. For the seller's side, the presentation is the opportunity to represent the equity story in person, that is, the case for why the acquisition is worthwhile. This works best before the bidders form their picture solely from the documents in the data room.

Each bidder receives its own meeting. The content is the same for all, so that nobody gains an information advantage and the offers remain comparable. Questions that remain open in the meeting are answered through the question list in the data room; answers of general significance are generally made accessible to all bidders. The presentation is often combined with a visit to the site.

In funding rounds, the process is less formalised. The in-depth presentation takes place with an investor's investment team. Depending on the investor, it comes before the partner round or, after signing a term sheet, the outline paper of the investment, at the start of due diligence. The investor leading the round usually receives the most detailed insight.

Process, content and participants

In a sale process, a management presentation often lasts half a day to a full day. The document is more detailed than a pitch deck, contains current figures and builds on the information memorandum. This structure is common:

• Company, development and ownership structure
• Market, competition and positioning
• Products, technology and development planning
• Customers, sales and sales pipeline
• Organisation, leadership team and personnel
• Finances: historical figures, reconciliation to adjusted EBITDA (operating result before depreciation and amortisation, excluding one-off items), current business performance against budget and plan
• Strategy and growth levers
• Question round, often the longest part of the meeting

On the company side, besides the management, the people who carry the business present, such as the heads of finance, sales and technology. Bidders want to see whether the company depends on a single person and whether the second management level supports the sale. Each person speaks on their own area and answers questions on it personally. On the bidder side, the transaction team and often advisers for financial due diligence take part, and for financial investors also specialists for operational development.

Preparation and alignment with the data room

Preparation begins with a list of the questions that bidders are likely to ask. Questions on these topics are typical:

• Deviations of the current financial year from budget and their causes
• Customer concentration and term of the most important contracts
• Adjustments that lead from the reported to the adjusted result
• Planning assumptions, in particular on new business, prices and headcount growth
• Dependencies on key persons, suppliers or individual technologies
• ongoing legal disputes, tax audits and conditions attached to grant award notices
• the future role of the management after the sale

These questions are put in a trial run, preferably by someone who critically challenges the planning and did not work on it.

Every figure in the presentation must match the data room, that is, the information memorandum, monthly financial statements, planning model and, where applicable, the report of a vendor due diligence. This is a review commissioned by the seller, the results of which the bidders receive. New figures, such as a current monthly financial statement, are placed in the data room at the same time as the presentation. Whether statements from the presentation count as disclosed, and can thereby exclude later claims of the buyer under the warranties in the purchase agreement, is determined by the purchase agreement itself. Often only what is documented in the data room counts; material oral answers are therefore supplied in writing afterwards.

Conflicts of interest of the management

In a sale to financial investors, the management is often offered a reinvestment, that is, a new stake in the acquisition structure, or a new participation programme. This can detach the management's interest from that of the selling shareholders, for example when a bidder with attractive management terms offers a lower price. Sellers therefore often stipulate that talks about the management's future participation take place only late in the process and only with their consent. A bonus for the management measured against the sale proceeds can align the interests again.

Practical example: management presentation in an auction process

A software company with revenue of EUR 18 million is sold in an auction process. After the indicative offers, four bidders are on the shortlist, two strategic buyers and two financial investors. The management presentations take place over four days within two weeks, each from 9 am to 3 pm followed by a site visit.

• The document comprises 40 slides and an appendix; the management and the heads of finance, sales and product development present.
• Adjusted EBITDA after nine months is EUR 2.1 million; the budget provided for EUR 2.4 million for this period.
• The deviation of 2.4 minus 2.1 = EUR 0.3 million is broken down in the presentation. Of this, EUR 0.2 million relates to a large order whose acceptance shifted from the third to the fourth quarter, and EUR 0.1 million to hires brought forward in development.
• For the full year, the budget provided for EUR 3.2 million. The forecast, the projection from actual values and current expectations, is EUR 3.1 million. The large order is accepted in the fourth quarter and stays within the financial year; the hires brought forward cost an additional EUR 0.1 million.
• The acceptance planning for the large order, the forecast and the headcount planning are in the data room from the day of the first presentation.
• Questions on customer concentration are answered by the head of sales, not the management, with the same figures as in the analysis in the data room.

Because the deviation was explained and documented before a bidder asked about it, it remains a question of timing and not of planning quality. Had it only come to light in due diligence from the monthly financial statements, the bidders would probably have valued the entire planning of the following year more cautiously and reflected that in their binding offers.

Distinctions: management presentation, pitch deck, information memorandum

• Pitch deck: the presentation for the first approach to investors, usually 15 to 20 slides in the main part. The management presentation is aimed at interested parties who already know the company, and goes into depth.
• Information memorandum: the written description of the company for the first round of offers. The management presentation builds on it and updates it.
• Investor meeting: the umbrella term for talks with investors in a funding round. The in-depth presentation in the review phase is one of its stages.
• Expert sessions: talks between individual advisers of the bidders and subject-matter leads of the company, for example on taxes or technology. They often follow the management presentation and deepen individual topics.

Common mistakes

• Reading out the document. The bidders know the information memorandum. The meeting is for what is not on the slides: reasoning, connections and assessments.
• One person answers everything. If the management steps in on every question, the impression arises that the company depends on it alone.
• Contradictions within the team. If two executives explain the same metric differently, bidders question the reliability of all other statements.
• Withholding weaknesses. What is left unsaid in the presentation surfaces in due diligence as a finding and then weighs more heavily than if presented openly.
• Figures without a data room reference. Current values that appear only on slides cannot be verified and often do not count as disclosed under the purchase agreement.
• Promises without follow-up. Documents announced in the meeting must be in the data room within the promised period.

Frequently asked questions

When does the management presentation take place in the sale process?

After the indicative offers and before the binding offers. The bidders invited are those admitted to the further process after the first round.

How long does a management presentation take?

In a sale process, often half a day to a full day, including the question round and, where applicable, a site visit. For funding rounds, two to three hours are usually enough.

Who takes part on the company side?

Two to four people are usual: the management and the heads of the areas that carry the company's value, usually finance, sales and technology. More participants make the meeting hard to follow; fewer leave the question of dependence on individuals open.

Does the presentation for strategic buyers differ from that for financial investors?

In emphasis yes, in the basic document no. Strategic buyers go deeper into products, technology and synergies, financial investors more into the predictability of revenue, the margins and the role of the management. If a bidder is a competitor, sensitive information such as customer terms is not shown in the presentation but made accessible later to a restricted circle of people.

What follows the management presentation?

The in-depth due diligence. The bidders ask questions through the data room, hold expert sessions and at the end of this phase submit binding offers, usually with a marked-up draft of the purchase agreement.

The Roemer Capital view

Before every management presentation, we run a full trial run with the team in which we take the role of the bidders and argue specifically against the planning. It often becomes apparent only then that several explanations are in circulation for an important figure. These are aligned before the first meeting and documented in the data room.

In the meetings, we moderate, keep the minutes and make sure that all bidders receive the same information. We place promised documents in the data room together with the management before the next bidder's turn. In a sale process that takes 6 to 12 months, the management presentations are the few days on which the bidders fix their picture of the team.