The Value of a Private Equity Partner

By Gina Cocking

In working with entrepreneurs who are considering raising equity, we are frequently asked about the value private equity firms bring to the equation. A private equity partner brings an industry perspective and leverages the teams’ backgrounds in management consulting, finance and operations to focus on value creation for the enterprise. Private equity firms will leverage their extensive networks to bring resources such as industry experts, operational executives and access to new partners/clients. Most importantly, private equity firms prioritize initiatives, establish clear plans and assist in disciplined execution of those plans.

Some areas in which private equity firms assist financial services companies:

Strategy

• Identifying and creating short-term and long term goals and plans
• Refining business strategy in the areas of marketing, product and service
• Prioritizing initiatives
• Identifying and aligning with industry best practices
• Add-on acquisitions: identifying, financing, executing and integrating

Operations

• Talent management: getting the right people in the right seats. This doesn’t necessarily mean letting someone go, but it can be adding more team members or moving people around to maximize talent
• Establishing dashboard metrics to track operational and financial performance daily, weekly and monthly
• Improving salesforce productivity by providing introductions to potential customers/partners, aligning incentives and reviewing team member focus
• Benefits and compensation: assisting in designing compensation plans to attract and retain key employees and at times bringing in experts to create cost effective benefits plans
• Enterprise risk management

Financial Management

• Focus on cash flowSales: coaching on enhancing revenues cost effectively
• Expenses: sometimes cost cutting, but more frequently minimizing “nice to have” costs and investing in differentiating capabilities
• Forecasting: essential to performance measurement
• Cost of capital: potential improvements

A private equity firm will be a partner in helping your firm reach its goals.

See more insights for entrepreneurs from Colonnade Advisors at https://coladv.com/blog/.