| |
| Driving value with diligence |
| PitchBook Dealmakers Column
In such a highly competitive market, private equity firms continue to pay high valuations to acquire quality assets. Whether acquiring a new platform or an add-on, using the diligence process as a tool to build value and jump-start the planning and integration processes will help accelerate the return on a higher purchase price.
Today, private equity investors may have to pay one or two turns more to win an auction and eventually close the transaction. Private equity firms continue to use the diligence process to identify the inherent risks in an acquisition, but are expanding the process to identify opportunities to drive value in the future. Doing so also speeds up post-acquisition planning and integration. |
|
For sell-side diligence, a holistic, more value driven approach will certainly help identify gaps and vulnerabilities early on, but in addition will identify opportunities to build value that may have been overlooked by the current management team and private equity parent. The adage, “you don’t know what you don’t know,” may best communicate how sell-side diligence can be used as a tool to drive value.
If today’s market conditions persist, we expect to see more firms utilize the diligence process as a mechanism to speed post-acquisition planning, initiate value based integration strategies, and to accelerate growth.
Gain additional insight. In the video series, Strategies to Accelerate Private Equity Growth, Claudine Cohen, Principal in CohnReznick’s Transactional Advisory Services, discusses how private equity investors use the diligence process and final report to drive post-acquisition growth.
This article represents the views of the author only and does not necessarily represent the views of PitchBook. |
|
| | | | | | | | Some highlights from the past week's content:
• KKR held a reported first close on its debut technology growth fund, the latest sign of the buyout behemoth’s gradual shift into startup-related activities.
• One of the side effects of PE’s increasing appetite for companies in the lower and core middle markets: the continuation of a decline in median transaction size. |
|
| | | Click to read our analysis |
|
|
• It’s been a meager year for PE-backed IPOs. The few companies to run the gauntlet, though, have been very well received once hitting the public markets.
• Since the start of 2013, a total of 22 American PE firms have completed 10 or more deals in the UK. We broke down the top nine. |
|
| | | | | | | | Consider Blackstone founder Stephen Schwarzman, who once compared raising taxes on PE firms to Hitler invading Poland in 1939, an optimist for the next four years. [Vanity Fair]
JPMorgan Chase will pay $264 million in fines for hiring the children of Chinese leaders to grease up business. [The New York Times]
The life of a lumberjack. [The Atlantic]
How to check an investment banker’s references. [Divestopedia] |
|
| | | |
|
|
| |
| Since yesterday, the PitchBook Platform added: | | 185 Deals | 1175 People | 431 Companies | 5 Funds |
| | |
|
|
| |
| |
| |
| |
| |
| |
| 2012 Vintage European Buyout Funds |
| | Median IRR | | | | Top Quartile IRR Hurdle Rate | | | | 1.25x Median TVPI | $1.4B Average Amount Contributed |
| | | | *IRR: net of fees | | 69 Funds in Benchmark » |
| | | |
|
|
| |
| Deals in Play & Announcements |
|
| J.C. Flowers, Värde lead Citi deal |
| | National Banks | Montreal, Canada | Buyout |
| | | | | | | ABRY-backed Inmar acquires Collective Bias |
| | Information Services | Rogers, AR | Add-on |
| Inmar, a portfolio company of ABRY Partners, has agreed to buy Collective Bias, the provider of a shopper-focused marketing platform designed to help brands and retailers engage consumers. Inmar is particularly interested in using the company's analytics to determine connections between consumer recommendations and in-store sales. ABRY acquired Inmar from New Mountain Capital in 2014. |
|
| | | |
|
|
| |
| ABRY Partners picks up Nuspire |
| | Security Services | Walled Lake, MI | Buyout |
| | | | | | | LongWater ups its sock game |
| | Clothing | Osage, IA | Add-on |
| LongWater Opportunities has acquired Fox River Mills from the company's family owners. Founded in 1900, Fox River is a manufacturer of knitted socks and handwear that's perhaps best known for its sock monkey products. The company will become a division of Standard Merchandising, which LongWater acquired last December. |
|
| | | | | | | GGC buys car wash supplier |
| | Commercial Services | Indianapolis, IN | Buyout |
| Generation Growth Capital has acquired Harrell’s Car Wash Systems, a distributor of systems and supplies for the car wash industry in Indiana, Illinois, Kentucky and Ohio. Founded in 1978, the company also provides consulting services such as site evaluation and financial planning for car wash businesses. |
|
| | | |
|
|
| |
| |
| Exponent, Livingbridge reach SBO pact |
| | Capital Markets | Borehamwood, UK | Secondary Buyout |
| Exponent Private Equity has agreed to acquire ENRA Group from Livingbridge, which will exit an investment from 2014 with the sale. ENRA is a specialty mortgage lender that comprises the Enterprise Finance, West One Loans and Aura Finance trading divisions. |
|
| | | | | | | Ardian on verge of Unither deal |
| | Pharmaceuticals | Amiens, France | Secondary Buyout |
| Ardian has entered exclusive talks to acquire a controlling stake in Unither Pharmaceuticals from Equistone Partners, Reuters reports. The bid also reportedly comes with the offer of a new investment in the company. Unither is a manufacturer of medical packaging products that was founded in 1993. |
|
| | | | | | | Beech Tree to pool $80M for second fund |
| | Beech Tree Private Equity has set an $80 million target for its latest fund, per an SEC filing. Founded in 2014, the firm typically makes investments in British businesses valued between €10 million and €100 million in the healthcare, consumer, financial services, tech and services sectors. |
|
| | | |
|
|
| |
| Centre Partners inks $1.1B exit |
| | Food Products | Minneapolis, MN | Corporate Acquisition |
| Centre Partners Management has agreed to sell Bellisio Foods to Thai buyer Charoen Pokphand Foods (BKK: CPF) for $1.075 billion, exiting an investment from 2011. Bellisio is the owner of frozen food brands such as Michelina’s, Boston Market, Chili’s and Atkins, with production facilities operating in Ohio, Minnesota and California. |
|
| | | |
|
|
| |
| Z Capital reveals several hires |
| | | | | | | | | Madison Capital hires Marcus Meyer |
| | Marcus Meyer has joined Madison Capital Funding as a managing director with the firm's originations team based in New York, where he is responsible for executing new investment opportunities from private equity sponsors across the northeastern US. Previously, Meyer was an MD at NXT Capital. |
|
| | | |
|
|
| |
| |
