Land and expand
An example of the “land and expand” strategy is demonstrated in the contract to support Sport England with the management of the £100 million National leisure recovery fund.
This initial contract is now being expanded to a 4 year multi-million pound deal as part of the current negotiation. As part of this original contract, 4GLOBAL acquired access to over 300 local authorities in the UK. These local authorities are potential buyers of licences to the established ‘CitiHub’ product; continuing with the same product base this reduces the inherent risk of new product development. The Directors believe this is a good example of how the company gains clients and develops these relationships over a number of years, as well as leveraging that relationship to grow its sales opportunity pipeline.
The “land and expand” model is also applicable internationally. Given the scale of the data in the DataHub, the Company is able to deploy its products in markets in which it is yet to acquire critical mass of country specific data. This is due to the models the Company has built to extrapolate results from the data points currently in its database. The business model applied in the UK has been successfully applied to the Company’s expansion in the EU as shown by the Europe Active contract, and the Directors intend to explore a potential similar deals in the USA within the next 2 years.
The Company is seeking to continue its international expansion – with a focus on Europe, North America and the Middle East, all regions in which the Company already has relationships and contracts. The Company intends to leverage its involvement in existing projects and established relationships in these territories. Target clients will include cities which are hosting major sporting events and those with the appetite to use sport as a catalyst for improving health outcomes.
The Company will purposefully focus on markets in which it already has existing relationships and contracts. This strategy replicates the successful experience achieved by the Group, for example with Lima (PanAm Games) and Neom in Saudi Arabia, whereby the Company’s initial engagement was via the provision of services, followed by a longer relationship that enables recurring technology and data revenue going forward. Sales activity will focus on the US and Canada using the Group’s Miami office (which is due to open in the near future) as a base. The Middle East will be approached through existing strategic partnerships.
The Company believes that the markets in which 4GLOBAL operates are ready for consolidation. The Company has invested substantial time in mapping and understanding the journey that its clients go through in order to identify areas where there are opportunities for potentially deeper interaction with clients, as well as the opportunity to lengthen client relationships. Where opportunities have been identified, the Company has evaluated the benefits of acquisition versus developing an in-house solution. This has resulted in a long list of potential acquisition targets, none of which has yet been negotiated or advanced beyond a preliminary stage.
The Company will only seek to acquire technology and data business that will generate recurring revenue. The companies identified that so far this ranges in size between £500k to £2m in revenue. Post Admission, and with cash earmarked from the Placing. In addition to the currency of the Company’s quote shares, the Board believes the Company will be able to execute an acquisition strategy to broaden its product and service offering. The Directors believe the Company has access to the necessary skills – both within the Company and amongst its advisors – to allow successful negotiation and execution of appropriate acquisitions at an attractive price, and to integrate within the Group.