Photo - WM Friendsourcing
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WM Friendsourcing

Buy and build strategy in outsourcing sector

Switzerland
Market: Internet and IT, Services
Stage of the project: Operating business

Date of last change: 26.01.2023
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Idea

This is an opportunity to participate in a high growth venture to build a Business Process Outsourcing (‘BPO’) and IT Outsourcing (‘ITO’) business of scale through a buy and build strategy with a view to profitable exit in (say) five years. It will be led by a strong and experienced management team with a proven track record in this sector and in business growth.
 
Outsourcing is a key lever for many organizations to function efficiently and is widely utilized by larger enterprises, particularly regarding financial, fintech, marketing and IT services. It is a high growth sector.

Current Status

The first target acquisition has been identified and negotiations commenced. A potential second acquisition has also been identified. The first acquisition is based in Poland and the owner wishes to sell due to retirement. It is a solid and stable business supplying mainly into the UK BPO services, mainly financial. It has a high percentage of repeat business and contracts and has the potential for considerable growth. Little marketing has been carried out previously. Although on the small side the MBI team believe it will be a good platform as it has strong core skills and access to additional local human resource. With a robust marketing and sales strategy and investment revenue could be of the order of €12.8m in five years.
The second potential acquisition is also based in Poland, and is a software house with Banking and Manufacturing clients.

Market

The market will primarily be Europe and North America.

Problem or Opportunity

Outsourcing is a key lever for most organizations to function efficiently and is widely utilized by larger enterprises. It is far less developed for SME organizations due to lack of scale, perceived capabilities and challenges in attracting talented, stable workforce.
WM Friend-sourcing fills this gap by providing outsourcing solutions for SMEs and start-ups. The target client is based in Europe and the US, with a primary delivery location of Poland.

Solution (product or service)

A characteristic of this business is the massive stickiness of the contracts.
We have identified an existing outsourcing company based in Poland which will ideally serve this customer segment. We intend to grow the business by extending the existing offering in additional markets, as well as creating new offerings.
We are seeking equity funding in part for the purchase of this business and additional funding for growth.
The timing is perfect, with the start-up Fintech segment slowing down prompting many opportunities in the market at a depressed valuation.

Competitors

Very large BPOs and software houses that are focussed on multi-million dollar contracts only, and sub-scale small players who suffer from growth challenges and serve primarily very limited clients.

Advantages or differentiators

What we bring to the table:

Very mature, well known management and advisory team who have setup and run centres in Poland, India, and other countries >>> Delivery capability
A wide, qualified network that makes bringing new deals to the table much easier and faster than traditional models >>> Growth capability
A preparedness for further buy-and-build strategy to quickly accelerate the scale to mainstream interest for exit >>> Integration capability
Access to people that would not be possible otherwise >>> Amazing talent on hand, credibility

Finance

The strategy incorporates the acquisition of an initial platform from which further acquisitions will be made. In parallel a growth strategy will be implemented to build a sustainable business generating a target revenue in five years of circa €30m and EBIT of €7m. The strategy will benefit from the consolidation of administration, accounting, marketing and management overhead which will be centralized. Growth will be both organic and strategic.

Business model

Our Business Model:
Full service, traditional and cutting edge BPO and some ITO service offering to SME and SME+ segment in UK, Europe and USA with a clear proposition of capabilities + capacity at a lower price point from a friendly location.
Delivery location: primarily Poland, with option to develop a second delivery location depending on demand.
Opportunistic M&A to capture specific target markets or additional lines of businesses. There are many SME businesses in outsourcing or related services that struggle to scale and are faced with a choice to close or sell existing products/services/clients. Usually these have a good residual value and a probability of success with the right management team.

Customer Base:
In addition to the SME+, WM Friendz will attract start-ups (funded) and growth stage ventures with a proposition to develop their product/services reliably and at a lower burn rate than host countries. This segment is underserved, and is overcrowded by advisors and coaches rather than delivery partners.
Of course, we will opportunistically approach large corporates with targeted propositions

Positioning:
A reliable, professional friend of choice with reasonable commercial structure that balances quality and speed of delivery.

Workforce differentiation:
WM Friendz aims to recruit and retain the best of talents without competing with the large corporate machines by utilizing common-sense methods such as looking beyond the tick-box recruitment requirements (degrees, similar experience) rather than recruiting for attitude and training in technical skills and on the job. 

Money will be spent on

Acquisition of selected target companies
Cash-flow
Growth via products // SaaS development

Offer for investor

Equity partnership on milestones based terms - existing companies with long term contracts serve as a collateral

Team or Management

Risks

Fragmented competition could spring surprises
Could be hard to get into ‘preferred supplier’ list of large companies through traditional routes
Single location delivery to start with
Geopolitical risks - war in Ukraine could spill over, or have other negative consequences

Incubation/Acceleration programs accomplishment

None

Won the competition and other awards

None
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Idea
Current Status
Market
Problem or Opportunity
Solution (product or service)
Competitors
Advantages or differentiators
Finance
Invested in previous rounds, $
Business model
Money will be spent on
Offer for investor
Team or Management
Mentors & Advisors
Lead investor
Risks
Incubation/Acceleration programs accomplishment
Won the competition and other awards
Invention/Patent
Photos
Product Video
Presentation