Building Business with Private Equity – An Operator's Perspective

October 17, 2018

Our company was recently acquired by a private equity firm.  We are a well-run, consistently profitable business in a high growth market space.  So why introduce private equity at this stage?  Why not reinvest in the business to drive growth?  Because while business leaders often ask what they can “do differently” to grow their business, private equity asks how can we “think differently” to enable business growth? 

 

There are 3 main differentiators that private equity offers to help your business achieve the next level of growth:

 

1) The “10x Factor” – As business leaders, we often get trapped in the mindset that we have to find a way to grow faster with a finite set of resources and capital available to us.  With private equity and their strong ability to supply capital & resources, a mind shift takes effect that removes the virtual obstacles in our strategic thinking.  When thinking BIG, what does 10x look like in your business?  What does the work-back plan look like to create the best path to success.

 

2) Contextual Insights – Private equity firms have a much broader view of the market, see more business plans than you can possibly imagine, and provide a much more insightful view into your unique business drivers.   They see market shifts much more quickly and can identify the blind spots that are tangential to your business.  Ask the taxi industry if they knew who Uber was in the early days and the power of its disruptive technology.  The investment community knew what was coming way ahead of time.

 

3) Expertise – Private equity firms offer a deep bench of expertise in a broad spectrum of business topics & issues through their direct teams, ecosystem of investments, executive contacts, and partners.  You can pose any question, issue, or challenge and chances are they will connect you with the right people.  It’s networking to the power of ‘n’ for any business leader and access to resources that would not have been available otherwise.

 

Choosing the right private equity partner is another topic altogether, however, considering private equity as part of your business strategy and ownership structure is worth considering when looking to scale your business.

 

 

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