Learnings from Private Equity - investment performance
A common notion among investors and deal makers is that Private Equity firms outperform their Corporate counterparts on investment returns. In our 'Learnings from Private Equity' series we test some common PE myths to see what the data tells us, and what we can learn.
Our typical value creation mandates, bringing a PE perspective
Early Upside Assessment
When: Prior to- or in parallel with diligence to test the initial equity thesis and challenge the upside potential
What: An outside-in assessment leveraging benchmarks, insights from comparators and testing initial value hypotheses
Why: Provides the investment committee with an initial litmus test of the initial valuation potentia
Commercial & Operational Due Diligence
When: As part of the diligence phase, in parallel or subsequent to the financial, tax, and other diligence work
What: Internal and external assessment to build confidence over growth outlook, forecast cost development and assess market & operational risks as well as opportunities
Why: To confirm the investment’s underlying equity thesis and obtain an objective opinion on risks and opportunities
Value-led Integration & Transformation
When: Post-deal but ideally pre-Day 1 to embed the right objectives into integration and transformation plans
What: Establish & execute a fully validated set of upside initiatives that form the basis of an integration programme or transformation
Why: Defines key focus areas and tangible levers for the program to ensure the assumed value and synergies are being created and realized
Private Equity Lens Review
When: When a business or unit underperforms or when a step change is required in competitiveness
What: An outside-in assessment of performance potential and opportunities, leveraging an ‘external investor’ perspective
Why: Takes an unconstrained view of improvement potential, relying on facts and experiences from outside the business to push the envelope
