15 August 2019
Private Equity funded transactions have become increasingly prevalent in today’s investment landscape and it is often the human capital element overlooked by business owners seeking investment. This can be an important factor and often a deal-breaker for PE firms, who are shown numerous potential opportunities.
So what is this human capital element and why does it matter so much?
If we look at the transaction from the Private Equity firm’s point of view they are not looking to be heavily involved in the day-to-day running of the business or to be the ones implementing the growth strategy going forward. This is the responsibility of a well-developed management team, often 2nd tier. Any potential weakness in the board and the senior management team sitting below can be viewed negatively from an investor’s point of view. In turn, this can lead to a reduction in the amount offered for a particular stake or the investor walking away from the deal entirely.
Private Equity now not only wants to know if the numbers stack up, but also if the team that is in line to deliver the growth plan post transaction is up to the job. Therefore it is vital that companies can identify potential weaknesses in their boards and management teams, prior to seeking investment, and start to address them.
We can help
Here at UHY Hacker Young’s corporate finance team, we often work with companies looking to progress via investment, and therefore have a wealth of expertise in this arena across our national and international network. Our Manchester CF team’s highly successful Inside Track events have also offered a number of insights into the world of fundraising or preparing for exit. Our next event is on 20 September entitled ‘Is PE for Me?’ and is a must attend for anyone looking to see what a PE deal is like ‘behind the curtain’.
UHY has expert advisers in offices throughout the country should you wish to discuss vendor due diligence, or a business sale process more generally. Please get in touch or visit our Corporate Finance page for more information.
Alternatively, fill out our contact form here.