10 signs a company is a match for Private Equity
By Rob Cossins on the 1st February 2023Private Equity
Finding targets takes time, and investment firms are often in competition with one another for deal-flow. The process includes refining a strategy, searching for relevant companies and understanding how a private takeover might deliver value. Here are 10 signs a company might be a good match for private equity.
- Performance: If a company is underperforming financially, it may represent a good point for a turnaround fund to invest.
- Retiring owners: family-owned businesses might be looking for an exit opportunity, and exiting to private equity will allow for a new management team.
- High debt levels: The existing debt structure might be holding back revenue growth - a restructuring with larger financial resources may support the company in getting back on track.
- Inefficiencies: Outdated systems or legacy processes may be ripe for streamlining, or modernising.
- Frequent changes in ownership: Multiple owners with differing interests can slow companies down. A takeover can unlock growth opportunities.
- Underutilised assets: Valuable assets that are being underutilised may be a good opportunity for investment.
- Market opportunity: Growing or fast-moving markets make for attractive opportunities for firms looking to invest in growth.
- Regulatory changes: Perhaps a market is facing new regulatory challenges, and investment firms may be able to help navigate through those changes.
- Weak competition: Acquiring a dominant position in a market, and potentially adding with bolt-on M&A, can unlock value.
- Strategic direction: An existing business might have a great product but be lacking a clear strategic direction for the following years (>5years).
Scribe is a data platform for company information, powered by research-based AI. We help Banks and Private Equity to uncover deep insights about private companies and end data entry from PDFs. Welcome to the future of company knowledge.
Header Image by WikimediaImages