Top tips for working with private equity investors

Top Tips for working with private equity investors

This quick guide gives you some top tips for working with private equity firms.

They are based on our many years’ experience of great transactions, so if you want to know more, please contact Skye Corporate Finance

Top tip 1: Appreciate that it’s expensive money
You might as well accept this from the start. It’s true risk capital and the terms reflect this Take it on when you really need it, when its going to make a real difference to your deal and your business and always look at the alternatives.

Top tip 2: Prepare for the challenge
Private Equity investors will test you. You’ll know a lot about your business but make sure you really understand the market, it trends and what makes your business better than the rest.

Top tip 3: Grow to exit
You must be able to grow your business otherwise Private Equity is not the place for you. Growth enhances value for you and the investors and this is crystallised when the business is sold. Having a sense of the eventual exit, even on day one, is critical.

Top tip 4: Negotiate hard
Private Equity players are good negotiators but they will compromise. Don’t be afraid to push for what you think is right and for what is best for the business. Chances are you will be right and your potential investors will come to realise this. Remember also that you have something they want – an investment opportunity, their very lifeblood and they can’t exist without it.

Top tip 5: Look for added value
A Private Equity house should bring more than just money. Specific expertise, improved credibility, good contacts and quality non –executives should all be in evidence. Your day to day business should feel the benefit of their involvement. And remember it’s like a marriage – if you don’t get on it won’t work so chose someone compatible.