10 PRIVATE EQUITY | DEMYSTIFY
AGENDA ALIGNMENT
Most entrepreneurial management teams are well aware of the importance of agenda alignment amongst the leaders of the business. This comes into sharp focus when a Private Equity investor joins the board. The investor agenda is likely to be simply to drive value. Altruistic objectives of management may not be shared by investors, although there is considerable growth in impact investing. Real success in a relationship with Private Equity comes where there is significant alignment, and non-aligned factors can be clearly de-prioritised. In our experience it is important to have absolute clarity about your own objectives and those of your team.
Questions you might find it useful to pose include: X What is your definition of success for yourself and for your business over the medium & long term? X What is your business plan to achieve this? X How much investment do you require to fund your business plan? X What alternatives are there? X What are your ‘non-negotiables’? ie the terms you would never sign up to X How could you accelerate your plans and grow your business faster? We typically help business owners to identify and prioritise their objectives and understand how they can be aligned with those of the Private Equity investor.
TAMING THE PROBLEM In our experience:
X Most scenarios can be modelled X Most legal constructions have been seen before X Most tax issues and structures have been encountered elsewhere already X Most behaviours can be predicted. Therefore, taking on Private Equity is, in some ways, a process. It is a particularly complex and intricate process, but a process nonetheless. In other words, it is a ‘tame problem’ ie a problem where solutions already exist.
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