A Rembrandt in the Attic
“James Prebble co-founded a digital consulting business called Palladium Digital. James and his partner realized they should focus just on serving private equity companies. Their services uncovered hidden digital value in the businesses that private equity companies considered buying. Palladium Digital eventually sold to a larger group and saw their business grow 3X profits,” shares Sam Thompson a Minneapolis business broker and the president of M&A firm Transitions In Business.
James Prebble co-founded Palladium Digital, a consultancy helping companies think about their digital strategy.
The company experimented with various business models until they landed on helping private equity groups get a return on their investments. Private equity groups hired Palladium to perform “digital due diligence” before they invested. Along with identifying any flaws in a target company’s digital strategy, Prebble and his team were also asked to identify any untapped digital assets that, if adequately exploited, had the potential to transform the business being considered for investment. Discovering these so-called “Rembrandts in the attic” is what private equity groups often look for to jack up their return on investing in your business.
Offering their services to private equity groups allowed Palladium to crest one million pounds in annual turnover quickly. Prebble thought his consultancy could fetch 5-7 times EBITDA, which is why he was keen to engage when he received a call from Next Fifteen Communications Group, an integrated marketing services giant with more than 2,000 employees.
In this episode, you’ll discover:
- How to attract talented workers before larger competitors snap them up.
- The downside of fixed price billing for a services company.
- One approach to dealing with “scope creep” on a project.
- What to do when you feel like your “driving your business with the hand brake on”.
- When an earn-out can make sense.
- How to perform reverse diligence on your acquirer.
- What acquirers will consider a problem when they perform digital due diligence.