Half-a-Billion Buying Flags
The murky waters of large public sector procurement offered a small trickle of clarity recently regarding a winning $500bn auction share by the UK government. Along with their Indian partners, a total of a cool billion bought a “bankrupt” satellite communications business; OneWeb.
Indeed quite the “unusual” purchase, for an anti-nationalisation, de-regulating, free-market expanding Right-of-Centre ruling Party.
Whilst wider scheme-benefits were acknowledged by the mandarins – from global standing to rural broadband – risks were said to be “stark”. Here’s one reported sentence of which many a seller may feel echoes;
“While in one scenario we could get a 20 per cent return, the central case is marginal and there are significant downside risks, including that venture capital investments of this sort can fail, with the consequence that all the value of the equity can be lost.”
Sensitivity analysis seeming to stem from this being that returns can vary in perhaps too large a fan, from the dreaded zero up to twenty percent. Suggested as likely leaning to close to the lower estimate due to the ‘marginal central case’ and ‘significant downside risks’.
There’s a number of techniques that arise from this tale of relevance to any solutions vendor.
Here’s three from the quote above alone.
Is your prospect truly aware of the documented return? What exactly is the central case? Can you give me a downside risk?
Deeper in the story more pointers emerge.
From where might ‘wider benefits accrue’?
What about reference to the UK public sector “Green-Book”? Where such ‘full Green Book-compliant business case’ is required to ensure no alternative project with better returns is not preferable.
And how about impact from any ‘part of a wider consortium’? Whose influence and work – both buyer and seller side – can also bring positive bearing onto your proposed project.