Your business needs investment to achieve the goals you have for it. You are considering the investment options. You need to find the right investors and deal to make the most of the opportunities and challenges you and your business face. Private Equity should always be one of the options. Whether it’s the first time you use Private Equity or you are a PE veteran, it can be a transformative and very rewarding experience. If you get it wrong, though, it can be very tough and stressful.
There are well over a thousand Private Equity funds in the UK alone. They are advised by many hundreds of Private Equity Houses or firms, that are often also PE investors in their own right. Each PE house looks to be distinct with its own investment strategy, culture and specialist areas of expertise such as a particular sector or type of company. If that isn’t enough choice, there are also Venture Capital funds and a myriad of other financial sponsorship models with distinct approaches to risk and reward.
The challenge is to find the right type of investor for your business, whether that is Private Equity or not, and the individuals you will be able to work with to achieve the results you want.
Making Private Equity work for you
Two simple actions will improve your chances of having a positive and, above all, a rewarding experience of Private Equity. The BDO Private Equity group can help you with both.
The frst is to define what success is to you and your business. PE investors have a simple definition of success; they typically aim to double the value of their investment in 3 years or treble it in 5 years. How you, and any other stakeholders, define success may be as simple as a monetary value but is usually much more complex. What do you want your business to look like? What is your driving ambition; is a legacy important or is money a key motivator? What do you want your future role to be? What will happen to the other people who work for the business?
With a clear definition of success, it becomes much easier to navigate your way through the vast number of PE houses to find the right partner whose goals, specialism and culture align with your vision.
The second thing you must do is prepare, prepare and prepare. You must prepare your business so that it is in the best possible shape for an investment, looking at every aspect of the business for gains in efficiency. You will need to prepare for a step change in financial reporting to keep investors satisfied. We would also advise you to look at a ‘Due Diligence’ questionnaire so you understand the sheer volume of information you will be asked to produce for potential investors as part of making a deal.
The BDO Private Equity group
We care about our clients and their businesses. We take the time to understand the people as well as the numbers behind the business. Our pragmatic approach means that our clients get advice and insights that they can act on. We are thinking about their long-term success as well as today’s challenges. Our clients have an ally throughout the lifecycle of their business even if PE is not the right investment route for them.
We are a group of more than 300 highly capable and experienced people with PE expertise in the UK alone. The group operates from across our 18 UK offices allowing us to get closer to the companies we work with. As part of the BDO global network, we are also an international practice with a presence in every major financial and commercial centre. This means we can find the best PE investors and opportunities across the world.
Each of us has extensive experience of working with PE-backed businesses in our own specialist areas such as audit, tax, corporate finance, other advisory services and in specific sectors. This means that we understand the unique pressures and challenges portfolio companies and their management teams face. Each of us knows how and when to draw on that collective experience and knowledge to deliver the best outcomes for our PE-backed clients.
Our collective experience of working with businesses to complete hundreds of PE deals, and our knowledge of entrepreneurially-spirited businesses, allows us to support our clients in achieving success as they have defined it. There is nothing like having been through a process hundreds of times to get to know the elephant traps and pitfalls.
The stages of the PE lifecycle
The following pages are designed to guide you through PE and how we can help you at each stage. The first stage is to explore whether PE is right for you. The next stage is to navigate your way to the right PE deal. Then you will need to create the value growth that is the end goal of all PE. The last stage is exit and an opportunity to realise the gains you have made possible.
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