Private equity as a powerful partner

Financial Services | Reports

With £1bn of recently raised capital and £3.5bn of firepower to back ambitious businesses, Andrew Priest from Inflexion talks about how private equity adds value.

Driving a successful business requires a careful mix of passion and perseverance. At certain points in a company’s development, management may consider taking on external finance, whether to fund investment, acquisition or even to buy out some shareholders.

In such circumstances, banks may be able to provide loans to facilitate finance without equity dilution. If, however, you are looking for a solution which provides more than pure funding and also includes expertise, private equity could be a better partner.

Just as no two businesses are alike, private equity firms come in different shapes and sizes. The right private equity backer will have experience in the type of development you’re looking to pursue, for example if you’re looking to expand by way of acquisition, it’s best to seek out a firm which has relevant experience in this complex exercise.

In the last year, we at Inflexion have assisted our portfolio companies complete over 50 acquisitions, from sourcing and approaching targets, to negotiating with them, to introducing banks where funding beyond our equity was required, and to then integrating the businesses post-deal. This last factor is not to be underestimated given the need to respect delicate cultures and embedded systems: one deal we did in 2018 doubled a business overnight (Huws Gray), whereas another has made over 50 acquisitions since its early 2018 deal with us (Succession).

Organic expansion could also benefit from the expertise of seasoned private equity firms. Some will have offices across Europe, or in markets further afield where local norms must be carefully respected. Last year we appointed an adviser in Boston, adding to our international expertise already established in China, India and Brazil. The warm introductions these local people can provide are invaluable in helping grow your business in unfamiliar territories.

Of course, not all growth is as exotic as plane journeys to faraway places; some can take place in your own office. A key way to create value is digital enhancement. Whether overhauling your website to better serve clients and generate valuable data on them or perhaps launching an app capable of driving sales through better engagement, an optimised, tailored digital offering can help your business in many ways. Our digital experts engage with management teams after a partnership to review their current state of affairs and then work together to assess how this can be improved.

At the end of the day, people are at the heart of businesses. Ensuring your staff are engaged is the best way to ensure you are getting the most from them, and so the alignment of interests you achieve with a private equity partner can help rejuvenate your team. This is particularly true when undergoing change, when things may get busier or require a new skillset. We have a Talent Director who has spent six years sourcing the right people for roles and who truly understands the importance of people power.

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