Private Equity’s Post

Key Insights from a CEO in the Midst of Executing His Thesis with Private Equity Support; One of the primary challenges encountered was the process of identifying the most suitable Private Equity partner. Despite their outwardly similar presentations, nuances in how these firms structured deals posed a significant hurdle... He thought all the deals would look pretty similar, but turns out, they were all different. Figuring out if they were a good match was way harder than expected. He felt there was a lack of tools available for him to facilitate this evaluation. Specifically, he was looking for a partner with proven expertise in the home services sector, along with a track record of collaborating with founders. Out of the ten prospective partners evaluated, only one aligned with these criteria. Additionally, his thoughts on the investment approach—whether emphasizing equity or debt—proved crucial, especially considering how many companies were pushing for a big chunk of debt compared to equity. Upon reflection, he further noted that engaging in discussions with a knowledgeable intermediary proved to be invaluable. Although he intended to survey a wide array of potential partners, his hesitance to actively solicit meetings presented a challenge. Leveraging the intermediary's connections and expertise in navigating the Private Equity landscape augmented the quality of engagements. Additionally, insights garnered from conversations with an experienced banker played a substantial role in informing the decision-making process. Ultimately, the task of meeting with various PE firms and measuring alignment proved more difficult than initially anticipated, highlighting how tricky it can be to team up strategically in the Private Equity world. #privateequity #rawselecton

Am I comfortable with the fees? When looking into Private Equity Investments you may ask yourself: "Am I comfortable with the fees associated with Private Equity Investments?" It's a valid consideration. But it's important to note that Private Equity funds charge management fees of 1.5 to 2% of committed capital to cover the active role they play in managing portfolio companies. And while the fees are higher than those associated with passive public funds, it's worth noting that Private Equity Managers include a performance fee or carried interest in their compensation, generally 20% of a fund's profits. This means that they are only paid if the fund achieves a certain threshold or "preferred" return (typically 8%), which aligns their interests with those of the investors. So, while fees may seem high, they are worth the price of admission considering the active management involved and the incentive structure that aligns interests. #PrivateEquity #Investing #Fees #ActiveManagement #CarriedInterest #InvestorAlignment #BrandonRenault #Liahona #GrowYourWealth

Captivating Profits, Controversial Practices, and Corporate Plundering: What Is Private Equity? https://lnkd.in/giSF2Max

As I surveyed this list of PE firms, I noticed several who have invested in the wealth management space. They must know something we don't 😉 . #wealthmanagement #financialadvisors

Captivating Profits, Controversial Practices, and Corporate Plundering: What Is Private Equity? https://lnkd.in/giSF2Max

The PE strategies are sustainable in the long term. Let's have a closer look at each private equity strategy so you can have the full picture when building portfolios. Read More: http://bit.ly/3n9upAj #PrivateEquity #InvestmentStrategies #SustainableFinance #PortfolioManagement #FinanceInsights #USPEC

Sharing this insightful article about the current situation of the private equity market. Happy reading!

The Strategic Secret of Private Equity (old article 2007, yet still holds many valid points for reflection) 'Private equity firms’ reputation for dramatically increasing the value of their investments has helped fuel ... Their ability to achieve high returns is typically attributed to: high-powered incentives both for portfolio managers and for the operating managers of businesses in the portfolio; the aggressive use of debt, determined focus on cash flow and margin improvement; and freedom from restrictive capital market regulations.'

Private equity firms are intensifying competition for investors by initiating fee discounts and presenting additional incentives. Read the below article to learn more:

Cost management is critical to PE firms, and their approach to it has changed recently. Funds are now investing significantly to upgrade the finance functions to transform cost-management capabilities in -portfolio companies. PE firms are also working hard to create operating structures that can drive operating leverage as the business grows. Read more in our latest Harvard Business Review article : https://lnkd.in/gFjPjsga #ValueCreation #PrivateEquity #costmanagement Harvard Business Review, Bridget Walsh, Peter Witte, CFA, Sandra Krusch, Stuart Gregory, Luke Pais, Paddy Moser, Gerrit Frohn, Tim Tracy, Chris Hamilton, Markus Boettcher, Amy Daly, Paul Pan, Neil McFerran, Fredrik Bürger, Dr. Dierk Buss, Raphael Maccagnan, Cord Stuemke, Craig Williamson