What does private equity look for?
Private equity is attracted to unique propositions that it can back, particularly those that have growth potential, are defensible, clearly articulated and have sufficient barriers to entry for new competitors. Perhaps, more importantly, investors back people, not just businesses. Therefore, while management teams must demonstrate technical expertise and industry knowledge, helping to forge a long-term, open and collaborative partnership with a private equity house is paramount to any successful relationship.
How does private equity support growth?
Private equity investment provides a company with more than just funding. The strategic and operational support that LDC offers management teams is critical to creating value quickly and building a better business.
There are a number of routes that a company can pursue as part of its expansion plans – all of which LDC’s team of experienced professionals can help guide and deliver.
Organic – Private equity is often used to drive investment into fuelling new product launches, expanding capacity and infrastructure with the view to expand sales and win new contracts organically. The expertise of the team is also called upon to drive operational improvements that can have a significant impact on the top and bottom line. Examples:-
Buy and build – Sometimes market share and scale is best gained through the acquisition of complementary businesses either vertically or horizontally within an industry. Our investment in A-Gas, the global distributer of speciality gas and chemicals, is a great example where we have backed the business to make several acquisitions that have since dramatically increased the company’s international footprint. A ‘buy and build’ strategy is a key driver for business growth and since 2011 LDC has provided portfolio companies with over £140m to support its management teams’ on-going ambition and commitment to deliver acquisitive growth. Over 1/3 of LDC’s portfolio has received follow-on funding. Examples:-
International expansion – Increasingly, businesses are looking away from their domestic markets to foreign shores to increase revenues and scale. We helped Fever-Tree, the premium tonic water and mixers company, to become a major global brand with distribution to over 50 countries and nearly two-thirds of revenues derived from exports. At the end of last year, the business completed its £154.4m IPO on London’s AIM market. More examples:-
For more information on how LDC can support your businesses growth please contact us.
by Sophie Reed