Most people think of seeking private equity (PE) investment only at the point at which they need additional capital.
However, the right PE partner can bring diverse benefits to a business, way beyond the capital they have injected. Their experience can deliver the strategic guidance, contacts and access to senior professionals with operational expertise, all of which are extremely valuable to businesses looking to grow to the next level.
Here we explore in more detail the many areas in which PE can help the businesses they partner with.
The right PE partner can bring diverse benefits to a business, way beyond the capital they have injected.
At Clearwater we know many of the relevant PEs, having negotiated and completed numerous transactions with them in the past. We have experience dealing with them, and often maintain personal relationships.
We are in a unique position to guide company owners on what type of PE would be suitable for the future development of the company, what their track record is, what and how they will contribute to the business – and most importantly – what it’s like to work with them on a day-to-day basis.
Access to capital – and more
First and foremost, PE investors do bring access to capital to fund growth initiatives, make acquisitions or expand operations. Lack of capital is often a bottle neck in the development of a business and increased access can enable the acceleration of growth plans.
But PE investors also provide strategic guidance to help portfolio companies get to the next level. These investors are experts at developing and refining business strategies, identifying growth opportunities and navigating challenges in the market. They are generalists, experts in developing businesses, whether it is entering new geographies, targeting new customer segments, acquisitions or other strategic initiatives.
Where the PE cannot offer specific industry expertise themselves, they have extensive networks of industry contacts, potential customers, suppliers and other resources that can be leveraged to benefit their portfolio companies. They may facilitate introductions to potential partners, customers or suppliers, and provide access to industry experts and advisors.
PE firms also often have access to senior professionals with operational expertise in areas such as finance, marketing, operations and strategy. They may actively support the management teams of their portfolio companies if needed to implement operational improvements, streamline processes or more.
Private equity can also help to establish a new governance structure during a transaction ready to take over following completion. New responsibilities will be delegated to owners, board and management – these will be clearly separated.
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