Devensoft Software provides a SaaS web based application that companies use to manage the complexities of Mergers and Acquisitions. Devensoft automates tracking and provides a repository of documentation. Devensoft allows for the measurement of synergies and financial performance. Devensoft has been operating its product since 2014. Sales more than doubled in 2015 and are projected to double twice by 2017. Devensoft appears to have strong and experienced management. The Devensoft investment opportunity is $1 million in capital.
When I apply the Business Godfather assessment of whether they are an Investable Business for me I look at:
- The Innovation Area
- Size of the Opportunity
- Inefficiency Capture
Innovation Area: Big Idea
With Private Equity and established companies looking for opportunities the M&A market is booming. Devensoft applies established innovations to a growing niche. Companies generally have a poor track record of integrating acquired companies.
Size of the Opportunity
While M&A activity is booming now, this traditional has been a cyclical market. While the potential market includes businesses with significant budgets their is a somewhat limited universe of potential users.
YELLOW if general investment; GREEN if Strategic Investment
Devensoft is clearly creating efficiency and value for clients. Current Pricing is billed on a per seat basis on an annual pre-paid subscription. The pricing strategy probably needs to be reviewed in an effort to improve profitability. Exploring success fees may be a way to gain client commitment and combat commoditization of service. Devensoft can provide great value as a strategic acquisition but there is danger that the service provided allows most of the value to flow to clients. YELLOW – RED
Business Godfather Commentary
I would want to see a clear exit strategy as an investor because there is a danger that Devensoft becomes a commodity in a cyclical business which is not attractive.
This Presentation Review is my opinion based on extremely limited information – a 1 page write up and 5 minute presentation. My assessment might change if I had conducted more thorough due diligence. I provide this assessment for educational purposes in applying the Business Godfather Investable Business Analysis. Entrepreneurs are always swimming against a universe of people who may not fully understand their true business innovation and that may apply to me.