RBS Group is a complete accounting application solution provider targeting its products to software companies. Their product, SOFTRAX, provides software companies with a full-package of solutions spanning in financials, sales & marketing, customer support and software operations. Robert O’Connor, RBS’s founder and CEO was seeking a $2 million second round venture capital financing to support their regional sales offices growth and recruit personnel in sales, implementation & customer support. Though RBS is still a young company, it indicates to position itself in a unique niche market within a solid market. They have seasoned management team and have allied with several key clients and partnerships. …show more content…
The next step for the firm is to support organic growth in order to be leader in the market. As RBS is the first entrant in the market , it is crucial for the firm to grow rapidly with minimizing cost and establish an effective presence in the market. By altering the direct store sales to emphasize on the verticalization of the software market, RBS will experience an organic growth without additional cost pressure. In addition, it is viable to establish the partnership with different software companies, which expands their source of revenue and builds their branding name quickly. As a result, it may be smart to delay the aggressive sales expansion to Southeast and Mid-Atlantic States. In addition, while expanding the new market, royal consumer retention is another point need to emphasize. Ultimately, by experiencing three phase expansion, investment in RBS will produce great exit multiples as an acquisition target. As the first paragraph mentions, Walnut Venture Associates should invest $1 million for this attractive target for their second round financing. The amount of money will be used to hire a V.P. sales and to open 1- 2 regional offices for sales expansion by reducing additional number of regional offices. As a result, we successfully make investment according to all $1 million cap for this attractive target. In terms of financial analysis, I have assumed 1.0x revenue exit multiple at