Idea-equity-label
Equity
This is an equity investment opportunity. Through equity crowdfunding you can invest in a start-up or small business and profit from growth in the value of the business.
Billboard_v2_groepsfoto_bob Play
Medium_thumb_1656332_10152301797159439_1846017987_n
JJ Van Der Laan team 2
JJ Van Der Laan ,

Best of Breed Training

A lucrative opportunity to take advantage of the upturn in the economy and the rapid move towards online learning; based on an existing business.

$58,221 INVESTED
100%
$58,221
Minimum target amount
10%
Equity
Small_thumb_1656332_10152301797159439_1846017987_n Best of Breed Training
INNER CIRCLE

Best of Breed Training

Proven track record in a structurally attractive industry.

Offering online & offline training to corporates.

Attractive investment opportunity: IRR 18%. 

Raising €100,000.

Aiming to increase value to €165,000 within three years.



Best of Breed Training

The training director of a large multinational gave us the idea for Best of Breed Training. "We just want to deal with the best. If we want to learn about strategy, we go to Harvard Business School. If we want to learn about e.g. performance management or presentation skills, we go to Dale Carnegie Training, and for other skills we go elsewhere." 


Best of Breed Training is a marketing & sales organisation acting on an exclusive basis on behalf of a selected few 'best of breed' training organisations catering for the mid-sized market (ca. 25 tot 500 employees) and internationally active organisations. Presently, our market is mainly the Benelux.


The products and services we sell have to be the 'best of breed'. Increasingly, our training solutions include various forms of very interactive and innovative eLearning. Our blue chip clients value our services highly and are a source of recurrent business.


The corporate training market is cyclical and went down by nearly 60% during the 'great recession' (source: Conclusion). The Best of Breed operating companies adapted and have returned to profitability and growth since 2012, whereas many competitors are still languishing. With training being cyclical, the upturn in the economy could lead to rapid growth in the training industry. The USA is ahead of us in the economic cycle and there we have seen post-recession growth rates of upto 15% (source: Forbes Magazine).



Why invest in Best of Breed Training?

There are several good reasons to invest.  For instance:

  • We aim to provide you with a very attractive return on your money in excess of 18% (IRR).
  • It seems more and more likely that the recession is coming to an end. Statistics point that way and it is our experience that selling is becoming easier again.
  • Training is cyclical and organisations have to make up sooner or later for the unprecendented downturn of nearly 60% during the great recession. When that happens, the industry is poised for rapid growth.
  • Dale Carnegie Training is one of the Best of Breed Training activities. Its century-old business model works in nearly 90 countries and has been successful even in economically harsh circumstances.
  • 'More, better, faster with less' is the current business reality for most of us. Technology will help, but at the end of the day it is people that make the difference. Training is therefore a structurally attractive business.
  • In our part of the world, nearly two out of three people bought something online last year. Especially younger people expect lots of learning via the internet. Amazingly, the vast majority of training companies only pay lip service to this new development. We embrace these technological changes and market & sell innovative blended learning solutions.
  • The Best of Breed Training business model is based on existing profitable and growing businesses. There are longstanding relationships with blue chip clients.
  • Investors will receive very substantial discounts on the Best of Breed Training products and services.

Risks

Every investment has its risks. However, we feel that the risks associated with an investment in Best of Breed Training are actually quite low because of the following:

  • We are not a start-up. In our first year, Best of Breed Training will have profitable sales of some €0.8m to existing customers. There is always the risk of losing a client, but if they have been buying for years from us and are satisfied, then there is low probabilty of them leaving.
  • We do not develop the eLearning technology ourselves. We source the best available technology in the market place and package it into a customised solution for our clients.
  • One of the advantages of learning how to adapt during the great recession, is that the company has a very low overhead and a flexible costbase. Where possible staff are on payrolling contracts with a short notice period. And suppliers and trainers are a totally variable cost.



Investment

We intend to raise €100,000. The funds will primarily be used for marketing and sales purposes. We will focus on marketing and sales of the existing brands (e.g. Dale Carnegie Training). 


We are very pleased to note that one of the most successful investors in the world, Mr Warren Buffett, reckons that taking part in the Dale Carnegie Course was his best investment ever. You'll find dozens of references to this effect on the internet.


In the 'Finance' section of this document, you'll see that we intend to provide investors with a return in excess of 18% over a three year period. Please do note that this return is inter alia dependent on the company's performance and ability to pay.


Best of Breed Training currently has two business lines:

  1. Language Skills Training
  2. Business Skills Training

Language training is thus far provided on an in-house basis only under the NewLanguage brand. Training takes place in small groups or on individual basis. Although practically every language is catered for, the predominant languages are:

  • Dutch
  • English
  • French
  • German
  • Italian
  • Spanish

Each training programme is customised and can be delivered in the 'traditional' format (Instructor Led Training or 'ILT'), via eLearning or in a combination of ILT and eLearning.


The eLearning we use may be described as groundbreaking. We start with the customer's content (company videos, manuals, websites, annual reports, presentations, competitor information, client proposals, etc.) and very quickly and cost-effectively turn that into interactive language eLearning. The result: Far more effective, relevant, enjoyable and efficient language learning. The eLearning has been tried and tested with large international organisations.


Business skills training is delivered in both an in-house and open enrolment format. The brand used here is Dale Carnegie Training. There are hundreds of online and offline programmes and modules available on which to base a training solution. The six curriculum areas are:

  • Customer Service
  • Employee Engagement
  • Leadership
  • Presentation Skills
  • Process Improvement 
  • Sales Effectiveness

Open enrolment training typically takes place on a number of consecutive days or spaced in time. In-house solutions might vary from a brief workshop to a multiyear, company-wide programme.


There is a very extensive extensive range of synchronous eLearning modules available. We call those modules Live Online and we reckon to have set the gold standard for online training, receiving levels of engagement and interactivity that rival many ILT events. Some characteristics of Live Online:

  • All Live Online programmes are rooted in Dale Carnegie Human Relations principles, which means that attendees will be treated like individuals. 
  • Every individual attendee must be ready to respond and interact with the instructor and programme peers, just like in the classroom. Participants shouldn't be surprised to be called on by name!
  • Participants save time and travel costs, and get the same quality Dale Carnegie coaching from their desktop.
  • There is a range of accreditations and certifications, including ISO 9001.



Investor Discount

Investors will receive a substantial discount on the products and services provided by Best of Breed Training. The discount depends on a) the investment made and b) product / service chosen. There are five discount levels:

  1. From €20 to €1,000, investors get a 5% discount on all open enrolment products.
  2. From €1,020 to €2,500, the discount on open enrolment is 10% and on in-company products and services 5%.
  3. From €2,520 to €5,000, the discount on open enrolment is 15% and on in-company 7.5%.
  4. From €5,020 to €10,000, the discount on open enrolment is 20% and on in-company 10%.
  5. More than €10,020, the discount on open enrolment is 25% and on in-company 12.5%.

The discount is limited to twice the invested amount. An example:

  • The investor buys shares worth €3,000.
  • The maximum discount available is then €6,000.
  • The applicable open enrolment discount is 15%. 
  • The investor wishes to enrol 10 of his staff in the Dale Carnegie Course, costing €1,800 per person. 
  • Each enrolment costs €1,565 (€1.800 - 15% discount). 
  • Total discount used is €2,350 (10 * €235).
  • The investor has €3,650 (€6,000 - €2,350) discount available for future training programmes. 

The discount is available until the end of FY17.

Improving Economy

As stated above, the training industry is cyclical by nature. When the economy turns south, larger projects will be postponed first whereas smaller projects and open enrolment training will continue for a bit longer. And when the economy improves, training will pick up when organisations are in a stronger financial position. 


We believe the economy has started to grow again and that training will be a growth industry for the next few years. Forbes Magazine published an article earlier this year titled Spending on Corporate Training Soars. It shows post-recession growth rates of 10 to 15% over the last three years. If we accept that the economic developments in Europe lag those in the USA somewhat, then the industry in our neck of the woods is set to recover rapidly from the great recession.



eLearning

There have been many false starts for eLearning. However, most of our clients are now either starting to use eLearning or are seriously considering it. Especially the millennial generation actually expects to be using eLearning.


Roland Berger Strategy Consultants recently published a report on eLearning. Some highlights:

  • It is estimated that the eLearning market will grow by some 20% annually over the next few years. 
  • Investment in eLearning has skyrocketed these past few years. In 10 years, investment in eLearning has increased 20-fold to some some €900m. 
  • In the USA, 20 years ago a mere 4% of companies offered eLearning whereas 77% now offer same.
eLearning makes the interacting with people a very different proposition. Trainers need to be taught how to use eLearning effectively and they need to be willing to embrace the new technology. But, a good trainer is a people person and that doesn't necessarily mix with technology. Standing in front of a group is what makes a trainer tick. The comfort zone is the classroom. eLearning requires different traits and characteristics in a trainer which provide an entry barrier.


With ILT, the trainer and the trainees have to be in the same place at the same time. eLearning can either be synchronous (same time, different place) or asynchronous (different time, different place). We find it essential to be able to offer both synchronous and asynchronous eLearning.



Fragmented Sector

There are no real entry barriers into the industry and as a result there are maybe 15,000 to 20,000 training institutes in the Benelux. Most of these are sole traders, but a few hundred are somewhat larger. However, there is no  training institute we know of with a double digit market share. The training industry is therefore a very fragmented one which has several consequences. For instance:

  • Smaller institutes find it more difficult to innovate. Quite often the owner is a trainer who has been 'flogging' the same product for quite some time and has a vested interest in not changing too much. They are product-oriented and not that good at marketing and sales.
  • The typical training institute has no assets a bank could readily finance. Most are therefore self-financed. Reserves have been depleted during the recession and there are no funds to innovate or agressively pursue growth. 
  • Large buyers get approached by hundreds of training institutes and can't see the wood through the trees. Having a strong brand is therefore an advantage.
Industry sources tell us a lot of training institutes are almost like sitting ducks at present. This provides an opportunity for a company with an innovative product range and agressive marketing and sales. 



Inbound Marketing

The majority of our leads are generated via the internet using a process known as inbound marketing. This for example involves being very active with blogging, on social media, with search engine optimisation and mailblasts. We have built a very substantial database with contact details of HR managers, line managers, training participants and so on. The inbound marketing activities provide us with warm leads. 



Cross-Selling

To date, we have used our database only to a limited extent for cross-selling purposes. Because of the nature of the database and the licences currently available to Best of Breed Training, we feel that we are well positioned to cross-sell online and offline language training at good margins.



How to Win Friends and Influence People

In 1936 Mr Dale Carnegie wrote a book titled How to Win Friends and Influence People. It was an immediate bestseller and was considered one of the Top 3 books of the 20th century. Since then, millions of copies have been sold and it is considered to be 'must read' book by many. In 2013, a revised Dutch translation was published and it made into the Top 10 of business books; not bad for a book nearly 80 years old. The book provides us with many leads.



USP's

A restaurant is not judged by its food alone. Lots of factors play a role: Was the reception welcoming? Was the restaurant easy to find? Was the waiter friendly and knowledgeable? Was the sommelier good? Were the other guests interesting? What did the restaurant look like? What was the price like? Etcetera. USP's are typically a combination of factors. Clients do business with Best of Breed Training because of factors such as:

  • The international network - being able to deliver high quality training  in dozens of local languages on five continents is very rare.
  • Blended learning - the ability to successfully mix and match between Instructor Led Training and synchronous and/or asynchronous eLearning sets us apart from the competition.
  • History - Dale Carnegie Training has been around for more than a century.
  • Customer satisfaction - business skills training has a customer satisfaction rating of 97%.
  • Groundbreaking eLearning - complete customisation of language eLearning at very modest cost enabling much more effective learning geared towards the clients needs.
  • Full range - from open enrolment to completely customised training.
  • How to Win Friends and Influence People - an everseller which has sold more than 15 million copies and which is continually quoted by management gurus all over the world.



Investment - Use of Funds

The funds will be used to double the expenditure on marketing and sales. Items will include: 

  • Additional sales capacity 
  • Branding
  • Client list acquisition
  • Database acquisition and extension
  • Developing distribution channels
  • SEO/SEA

As is our policy, we will endeavour to keep costs as flexible as possible. When it transpires that an investment in e.g. software or people does not work out, then we'll cut those costs real soon.


Business Model

Best of Breed Training will act as a marketing & sales organisation for - so far - two training institutes. There are several hundred corporate clients and a few dozen of those are responsible for most of the turnover. The client enters into a contract with Best of Breed Training and the assignment is then subcontracted to one of the aforementioned training institutes. Some advantages of this structure:

  • Best of Breed Training has a low fixed-cost base and therefore remains very flexible.
  • Subcontracting is done a cost-plus basis which means that the majority of profits remains with Best of Breed Training.
  • Best of Breed Training is a new legal entity, and as such has an unencumbered balance sheet.
  • Clients know that for a range of training needs, they have a one-stop-shop for the best solutions on the market saving them time and money.
  • There is no attempt made to build a costly new brand. Instead we rely on improving existing brands. Dale Carnegie Training's worldwide brand is certainly a major advantage.



Forecast

From day 1 we'll have profitable sales currently at nearly €0.8m per annum. Based on a) past experience, b) the growing economy and c) the online learning developments, we feel that 15% to 25% growth should be feasible. However, it's better to err on the side of caution. We therefore forecast sales will increase to €1.2m within three years, implying a growth rate of almost 15% per annum. 


EBITDA on sales should be 12% to 15%, which would enable the company to buy out the investors in three years time, offering them a very attractive 18% return. 



Valuation

Professional company valuer Equidam uses five different valuation methods to estimate the value of Best of Breed Training. The weighted average of these methods values the company at €650k. However, we do want not get ahead of ourselves and therefore value the company 'as is' at €0.5m. We are selling 20% of Best of Breed Training for €100k and intend to provide investors with an 18% IRR in three years time. 



Exit

We intend to use the funds to kickstart the further development of Best of Breed Training. We realise there are many investment opportunities out there, and seek to make ours attractive to an investor. The exit we would like to offer our investors by the end of the fiscal year 2017 (31st August 2017) is the following:

  1. Call Option - Best of Breed Training buys back the shares at 165% of original price. For example, if an investor bought shares worth €10k, then these would be bought back for €16.5k. The IRR is in excess of 18%.
  2. Put Option -  Shareholders have a put option to sell their shares at 165% of the original purchase price. 

The options may be exercised during the three months following FY17. It is most certainly our objective to realise this return for our investors. However, this is an equity investment and the options will inter alia be dependent on the company's ability to pay the funds. 


In addition to this attractive return on investment, investors are also entitled to significant discounts of up to 25% on the Best of Breed Training products and services as described above in the Product section.