Growth Strategies and Value Creation for Private Equity: Video Series
Funds & Portfolios Change Mindset to Better Identify Growth Opportunities
Innovative growth requires a collaborative effort between private equity firms and their portfolio company management teams. Even though the private equity firm may initiate discussions relative to driving growth through the identification and implementation of new processes and advanced technologies, it is the portfolio companies that need to accept, adopt and adapt. Jeremy Swan, Managing Principal of CohnReznick’s Financial Sponsors and Financial Services Industry Practice, suggests that sometimes, portfolio companies need help and encouragement in identifying innovative growth strategies. When private equity firms and their portfolios collaborate, they can uncover greater opportunities for growth.
Prepare for What's Ahead with the Right Mix of M&A and Organic Growth
M&A is part of the DNA of most all private equity firms. Balancing growth through merger and acquisition activities with innovative organic growth initiatives will build more value. Given today’s valuations, private equity investors may experience a greater return from strengthening and creating efficiencies through their portfolio. Jeremy Swan, Managing Principal for CohnReznick’s Financial Sponsors & Financial Services Industry Practice, says that those private equity firms that create long term stable cash flow will survive in any market.
Driving Value in Tornado-Like Market Conditions
Several market factors are contributing to a dizzying environment for private equity. Levels of dry powder remain high and the quantity of quality assets remains low pushing valuations in most industries higher. In this kind of an environment, strategic investors and financial sponsors are challenged to justify some transactions and their accompanying valuations. Even so, Jeremy Swan, Managing Principal of CohnReznick’s Financial Sponsors and Financial Services Industry Practice, sees private equity growth continuing. If debt becomes more expensive or less readily available, that could impact the ability to finance transactions.
Rethinking The Transaction Process To Complete Quality Deals
Cross Border Transactions Lift Private Equity Growth
Most private equity firms who have not tested cross-border acquisitions are hesitant to do so. Regulatory uncertainties, cultural differences, and both domestic and international politics and policies play a part in the decision to expand beyond the borders of the United States. Claudine Cohen, Principal in CohnReznick’s Transactional Advisory Services Practice, sees cross-border acquisitions as an opportunity for some private equity firms to accelerate growth from existing platforms.
More Weight Placed on Cybersecurity During Diligence
With the incidence of cyber breaches on the rise and the impact that a breach can have on the current and future value of an acquisition, Cybersecurity has become a greater concern in the transaction process. Claudine Cohen, Principal within CohnReznick’s Transactional Advisory Services Practice, explains that specific industry sectors are at higher risk.
Innovative Analytics Drive Value Through Investment Lifecycle
Portfolio company management teams can use analytics to get a clear line of sight into sales performance and product probability and it can help identify acquisition opportunities. The finance function can be strengthened with detailed information on operational and financial metrics, and make reporting up to the private equity parent more stream-lined. Watch as Dean Nelson, Principal and National Director of CohnReznick’s Technology & Digital Advisory Practice, and explains a new program called Analytics Enablement and how it helps portfolio company management teams and their private equity parents drive value.