What is the private equity investment process?
Every private equity deal is different, but there are a number of common stages that make up the process when working with a private equity partner. LDC will work with you to make sure the approach taken suits your needs.
1. Understanding
We will meet and work with you to understand your business and ambitions. At the same time, you will get to know the people who would support you, and we can share our relevant experience and how we like to work.
2. Offer letter
If we are a good fit and think we can work together, we will explore what a private equity investment might look like. We develop an offer letter that explains how we would like to move forward with our investment in your business.
3. Due diligence
We continue to learn about your business and use external consultants to complete more formal due diligence on your company and market. This is to substantiate our positive view and helps to identify future opportunities to create value.
4. Business plan
We work with you to understand and refine your business plan and objectives – based on insights from the due diligence and the opportunities created by your private equity investment.
5. Legal agreements
Our legal partners will work together to draft the formal legal agreements relating to the investment.
6. Signing the deal
We all reach a final agreement on the investment deal structure and financials. The legal documentation is signed and completed.
7. Sharing the good news
We work with you to agree how best to communicate the good news to your employees, customers and the broader industry.
8. Welcome to the LDC portfolio!
After the celebrations, you will be ready to get on with your growth plans. One or two members of the team you have worked with during the process will join your board as non-executive directors to support you, and you’ll have access to the wider LDC portfolio and teams too.
How do I get my business ready for private equity investment?
Every path to growth is different, but if you’ve made the decision to explore private equity investment there are the four key steps every business owner should take to ensure they are ready for investment:
1. Check the books
Always take time to make sure your books are in order. Potential investors will be looking to identify opportunities for growth – so it is key to be able to evidence your success to date, and outline a clear, achievable plan for the future.
2. What’s your vision?
Every business leader is fuelled by their ambition and vision for the future success of their company. Private Equity partners look for a clear articulation of this ambition, and the strategy your team will follow to get there. For LDC, if we can easily understand the management team’s vision and strategy, it means we’re best placed to support from day one.
3. Focus on people
A private equity partnership is all about building strong relationships and working closely with those running a business to help make their ambitions reality. Investors will also value plans to retain and nurture existing talent in the business, and opportunities to bring in new skillsets.
4.Consider the risks
Don’t fall into the trap of constructing your business plan wearing rose-tinted glasses. Factoring in any potential bumps along the road, shows you have thought carefully about how your business will adapt to potential challenges, and how to maintain cashflow through peaks and troughs.
Jodie Howie, Shaken Udder
Since the investment, LDC has helped us find a great finance director and an experienced non-exec; they have great connections and made the introductions.”
Grant Mansfield, Plimsoll Productions
Every month, we sit down with input from LDC and talk through recent developments and discuss where we want to take the business next.”
Jan Steele, Lucid Group
LDC brought rigour to how we assessed a management team of the business we wanted to acquire, helping us to follow a process so that we knew we were making the right decision.”