BDO LLP | PRIVATE EQUITY
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SUPPORT ON OFFER? Before you choose an investor, you need a clear idea of the type of support you need. If you are an earlier stage technology business, you may want support in sales and finance. If you are a larger and more established tech business, you may need help with an acquisition strategy and international expansion. The level of support on offer is key when judging potential investors. How much experience do they have of successfully providing the kind of support you need? Ask how supportive the investor has been with existing investee companies over the pandemic, for example. And ask to speak to existing investee companies for their opinion on the support offered and received. IT’S ONLY FAIR Your management team will be heavily scrutinised by potential PE houses. It seems fair that you should apply a similar level of scrutiny to any potential partners! As well as asking questions about the terms of the offer, remember to ask the five questions highlighted here.
POST-DEAL INVOLVEMENT? Often, PE houses have dedicated portfolio teams focused on managing the investments made. The portfolio team will take over from the investment team that you may well have built a strong relationship with. It is advisable that the handover from investment to portfolio team is done as soon as reasonably possible, preferably ahead of the deal completing. This will allow you to develop a relationship with the new team and settle the questions such as: • How will your investor be involved after the deal is done? • Will the investor take a board seat? • Who from the PE house will be appointed? • What type of board meetings will occur and how often? • How much interaction will there be with the management team? GENUINE MARKET INSIGHT? Many PE houses will cite technology specialism as a point of differentiation. But it takes more than a couple of relevant investments to develop the level of knowledge that is going to really help your business. Here are the things a PE house with genuine technology expertise should be able to demonstrate: • Numerous deals over many years in the tech market or sub- market • Well connected with industry executives and non-executives • Demonstrable understanding of the issues facing your sector, such as opinion pieces or published articles. 4.
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