PRIVATE EQUITY | REALISE 5
PRIVATE EQUITY | REALISE
4
LAUNCHING YOUR FORMAL SALES PROCESS
POSSIBLE EXIT TRIGGERS Market opportunities Company-specific performance Macro-economic conditions Private Equity investment cycles
EXIT OPTIONS Sale to Private Equity
Sale to trade Listing (IPO) Refinance
Private Equity ownership has a defined start date and may well be characterised by an anticipated hold period. However, management teams face numerous issues and challenges leading up to and during the sale process. The capital event that marks the end of a Private Equity investment should be executed in a planned, well thought-through and precise way to maximise value and minimise risk. It is never too early to plan.
PLANNING THE EXIT FROMTHE START Achieving the greatest returns begins with ensuring that “exit readiness” is a Board agenda item from day one. The strength of the articulated value story and preparatory work undertaken is often the difference between an exit that offers outstanding returns and one that disappoints. We help businesses stay forward-looking during the entire PE lifecycle by: X Providing challenge around progression against the stated corporate strategy X Identifying growth opportunities that enhance performance – both organically and through acquisitions X Understanding the likely buyer communities and transaction options X Assessing upon the best exit process.
WHEN IS IT TIME TO SELL? The ultimate goal of Private Equity is to realise a superior return to its funders compared to other investment opportunities (stock market, bonds etc.). Therefore a PE portfolio company will be “always for sale”. Hold periods vary, typically between three to five years, and therefore an exit is a natural part of the evolution of every PE transaction. That exit may be planned, but it may also be a response to events in the market. In the run up to an exit, it’s hugely important that all stakeholders are aligned in their ambitions for the business and the corporate strategy sets out the road map towards that preferred exit route. We work with businesses to ensure that when the right opportunity arises – even at short notice – they are primed and ready to take advantage.
RELENTLESS FOCUS ON MAXIMISING RETURNS AND MINIMISING RISK
CORPORATE STRATEGY – Is there a well-defined investment hypothesis? – Is the PE journey evidenced? – What is the exit plan?
RISK – Have potential exposures been assessed (eg cyber security, tax, FX)? – Is there a robust control environment? – What does the scenario planning say about the future equity story?
FINANCIALS – Are the appropriate KPIs tracked? – Does the management information support the value story? – What does the history of previous period say about the next period of growth?
LEADERSHIP – Is the right team in place? – Are they appropriately incentivised? – Is there a clear succession plan and talent pipeline?
REPORTING – What accounting policies need detailed explanation? – How much forward visibility is there on revenue (eg order pipeline)? – Have any acquisitions been fully integrated?
OPERATIONS – Is the right corporate structure in place? – What operational initiatives are envisaged? – What further capital investments have been made?
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