Investment Process

K2's Investment Process

Dear Director
We are delighted that you are considering K2 Business Partners as possible investors in your Company.

K2 invests its time and expertise in return for equity or success fees to ensure it has a stake in the success of its involvement in your Company. While our investment might also involve injecting some cash into your Company to achieve strategic objectives this will always be as a loan. Our approach is intended to ensure an alignment of interests for the outcome of K2’s investment.

K2 and its investor partners have relationships with a number of private and corporate investors. Where we identify the need for investment in growth capital, we will introduce appropriate investors once the company is investment ready.

Confidentiality
We treat all information provided to us as commercially confidential and observe strict policies to protect your communications with us and secure any confidential information that you provide to us.

To reassure you that you are dealing with us, you will only ever deal with a K2 Partner who is listed on our website and we all have a K2 email address with the same domain name as our website.

To reassure you about the protection of your Confidential Information we are happy to sign a Mutual Non-Circumvent Non-Disclosure Agreement (Mutual NCNDA) with you. If you fill in your name and email below, we’ll send you an electronic Mutual NCNDA for us to co-sign.

Investment process overview
K2's 3-Step Success Driven Investment Process
Phase 01
Application
  • Initial Research
  • What information is requested
    for the Initial Research?
  • Investment Readiness Call
  • Investment Readiness Meeting
  • K2 Bridge Transformation Approach to investment
Phase 02
Options Overview
  • Introducing the Options Review
  • Scope of the Options Review
  • What documentation is requested
    for the Options Review?
  • Options Review Document
  • Options Review Meeting
Phase 03
Investment
  • Types of investment by K2
  • K2 Partner
  • Expectations of K2’s involvement as Investors
K2's Investment Process is intended to identify value in your business that we can help unlock through our investment
Phase 01 Application
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We carry out Initial Research to help us understand your market, your business and its opportunities before an Investment Readiness Call. We use an online calendar appointment booking process to ask some initial questions about your business.

When booking the Investment Readiness Phone Call we will ask you to provide the following information which can be provided online:

  • Company details;
  • Contact details;
  • Basic financial information;
  • Details of assets;
  • Opportunity for growth;
  • Details of any immediate issues.

We also do some preliminary research of the following:

  • Research your market and competition;
  • Look up the publicly available financial information about your Company;
  • Review your website, social media and other publicly available marketing literature;
  • Review the Company and directors’ LinkedIn profiles.

The Investment Readiness Call will be with a K2 Partner and normally one or two directors who are, or who represent, the major shareholders. It is done as a conference call; we have conference facilities although we are happy to use yours or speak via Zoom.

The Investment Readiness Call is wide ranging and we use it to learn more about you and your Company, including among other things:

  • Your personal objectives;
  • Your objectives for the business;
  • The alignment of objectives between you, the Company, the Directors and the Shareholders;
  • The opportunities, threats strengths and weaknesses of the business;
  • The financial situation.

Providing there is sufficient interest by both Directors and K2 to proceed, we fix an Investment Readiness Meeting to discuss the next step.

We use the Investment Readiness Meeting to discuss the opportunity in greater detail and go through our Bridge Transformation Approach to investment.

K2 has developed a unique approach to transforming the prospects of those businesses in which it invests. In essence K2’s approach is to focus on two bridges:

  • Balance Sheet Bridge; and
  • Profit and Loss Bridge.

Both of these involve reviewing in detail each and every line item of your Company’s Trial Balance to identify the optimal outcome that can be achieved by K2 through its investment in transforming the prospects of your Company.

The next step is to discuss and agree terms for K2 to produce a Balance Sheet Bridge which is the outcome from an Options Review
Phase 02 Options Review
Introducing the Options Review
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Once you are happy for K2 to carry out an Options Review, which is essentially the Balance Sheet Bridge referred to above, we then agree terms. The Options Review document is highly valuable as it is a document that we provide to you as the Directors and can be used as the basis for negotiations with investors, banks, HMRC, creditors and other stakeholders for delivering your preferred option.

It should be pointed out that at this stage K2 is not normally an investor or shareholder in your Company. We use the preparation of the Options Review as a means of learning more about your Company and its opportunities and develop a number of options that justify K2’s investment. We also use the Options Review to develop our relationship with you and establish your trust in us which we believe is a critical ingredient to any investment and becoming partners.

Given that the Options Review document is highly valuable for decision-making and dealing with stakeholders, we charge £2,500 plus VAT of which we expect to be paid £1,250 plus VAT up front with the balance payable after going through the Options Review document with you and providing you are happy with it.

As noted in the introduction, K2 invests its time and expertise in return for equity or success fees to ensure it has a stake in the success of its involvement in your Company. While our investment might also involve injecting some cash into your Company this will always be by way of a loan. Our approach is intended to ensure an alignment of interests for the outcome of K2’s investment

The Options Review focuses on the Trial Balance figures that make up the Balance Sheet although many of these figures are analysed in greater detail to understand pressure and the scope for improvement. As an example, the level of overdue payments will be analysed to understand any pressure from HMRC, finance companies and creditors. The purchase ledger and sales ledger will be analysed, as will bank, mortgage, lease, hire purchase and finance agreements. Charges, specific pledge security and personal guarantees will also be reviewed.

We shall request the following information but appreciate you may not have it all so do not worry as we will work with what you provide and then follow up to ask for more information if we need it:

  • Last filed year end accounts;
  • Unfiled/draft year-end accounts if accounts not yet filed;
  • Latest management accounting information;
  • Details of assets and liabilities;
  • Details of any litigation and debt collection;
  • Details of any KPIs and other management information you use to monitor the business;
  • Any relevant budgets, forecasts, cash flow schedules and/or trading projections.

The Options Review is used to develop our Balance Sheet Bridge. The document lists each item from the Trial Balance with many being broken down into more details as necessary to paint a comprehensive picture. While the numbers come from the accounts, they are analysed to identify how each one can be transformed when applied to each possible option. Although detailed, each number should be easily understood by all Directors and the bringing together of all the numbers helps show how the prospects for the business can be transformed.

The Investment Readiness Phone Call is wide ranging and we use it to learn more about you and your Company, including among other things:

  • Your personal objectives;
  • Your objectives for the business;
  • The alignment of objectives between you, the Company, the Directors and the Shareholders;
  • The opportunities, threats strengths and weaknesses of the business;
  • The financial situation.

Providing there is sufficient interest by both Directors and K2 to proceed, we fix an Investment Readiness Meeting to discuss the next step.

We use the Investment Readiness Meeting to discuss the opportunity in greater detail and go through our Bridge Transformation Approach to investment.

When the Options Review Document is ready, we meet with you to go through the Options Review Document to explain how the bridge works and how each option was arrived at. Once you are happy you understand the document, we then discuss your options before considering which might be your preferred option.

  • Balance Sheet Bridge; and
  • Profit and Loss Bridge.

Both of these involve reviewing in detail each and every line item of your Company’s Trial Balance to identify the optimal outcome that can be achieved by K2 through its investment in transforming the prospects of your Company.

The next step is to discuss types of investment and terms of reference for K2 to become investors
Phase 03 Investment
Types of investment by K2
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As noted in the introduction, K2 invests its time and expertise in return for equity or success fees to ensure it has a stake in the success of its involvement in your Company. While our investment might also involve injecting some cash into your Company this will always be by way of a loan. Our approach is intended to ensure an alignment of interests for the outcome of K2’s investment.

It should be pointed out that at this stage K2 is not normally an investor or shareholder in your Company. We use the preparation of the Options Review as a means of learning more about your Company and its opportunities and develop a number of options that justify K2’s investment. We also use the Options Review to develop our relationship with you and establish your trust in us which we believe is a critical ingredient to any investment and becoming partners.

Given that the Options Review document is highly valuable for decision-making and dealing with stakeholders, we charge £2,500 plus VAT of which we expect to be paid £1,250 plus VAT up front with the balance payable after going through the Options Review document with you and providing you are happy with it.

  • K2 acquisition of majority equity
  • K2 minority equity stake
  • K2 success fee for delivering preferred option from the Option Review
  • K2 deferred consideration

You will always have a K2 partner as your primary contact person. You should always feel free to contact them at any time since we believe that as investors we are partners with you and that we have a mutual interest in the future success of the Company.

We want to be clear about what K2 does and does not do.

K2 are not consultants, advisors or coaches. We are doers, decision-makers and implementors. We take responsibility for delivering the changes required to meet your Company’s circumstances.

K2 are not insolvency practitioners. While we may make use of insolvency procedures to solve problems such as restructure balance sheets, we do not administer insolvency processes. As directors we consider all options open and agree which best achieves the desired outcome for your Company.

K2 are not equity investors. We do not simply provide funding. We engage in the financial restructuring and operational reorganisation and where it still undercapitalised, we make it investment ready for equity investors.

K2 are not corporate finance advisors. We do not simply arrange balance sheet restructuring and/or source funding. We are involved in restructuring all aspects of the company’s business model as required to transform its prospects.

You should expect K2 to be involved with every aspect of your Company but we would normally expect to focus on those areas where we have particular experience and in particular:

  • Hands on crisis management and problem-solving;
  • Strategy reorientation and market focus;
  • Financial restructuring;
  • Organisational and operational reorganisation;
  • Finance, cash management and fund raising;
  • Stakeholder negotiation and dealing with key creditors;
  • Sales, marketing and lead generation;
  • Opportunity development and exploiting intellectual property;
  • Litigation and legal matters;
  • Corporate governance, processes and business systems.