In Private Equity, leveraging a global network is critical in creating significant return on investment. Performance improvement, identification of high profile as well as off-market acquisition targets, and taking advantage of any other number of creative and strategic ways to increase the overall value of portfolio companies through business development and identification of other opportunities can differentiate a simple “exit” from a “home run”.
The Largest Funds Have A Built-In Network
For the largest U.S. and internationally based private equity funds, plugging into a robust and diverse global network of service providers and specialists and business opportunities that can improve a fund’s performance is often just a phone call or email away. The process of identifying acquisition targets and add-ons can be greatly simplified and expedited by leaning on your internal team’s vast network. But even with this large network, opportunities can be missed.
Smaller & International Funds – The Need For A Network
For funds that are middle market or smaller, especially those that are located outside of the U.S. seeking investment in the U.S., a strong local network may not exist within your fund infrastructure. Layer on proximity, language, cultural, time and other differences, and your acquisition strategy and ability to perform can come up against multiple challenges.
The questions that a smaller or non-US fund may ask itself are likely broader than those for a large fund with a large infrastructure and even larger network in place. But a brief internal Q&A can help you identify the right people and organizations to leverage to get access to real opportunities:
• What are our key operational issues in our existing portfolio companies, and what types of experts might be able to help us improve?
• What types of assets and companies are we looking to acquire and invest in, and how should we go about identifying them?
• Do any strategic opportunities exist to generate or add value to our existing portfolio companies?
Having a dedicated local resource on the ground capable of helping your team in putting a process in place to work through these questions, and to help you connect with the people and firms you need to build efficiencies, identify assets, and grow the business of your portfolio companies can create a tremendous savings in time, energy, resources and most importantly, drive value.
Working with a “connector” on the ground can go a long way. By sharing your goals, hopes, and dreams for your fund, you can enable the right resource to seek out advisors, acquisitions targets, and business opportunities that can be a game changer for your fund and expanding list of portfolio companies. Supplementing your fund’s existing network can empower your team to identify and seek out the specific relationships you need to grow your business.
Making Sense Of It All
Regardless of whether you are a large US based private equity fund, or a smaller fund based in our outside of the US, a lot can be gained by assessing your business needs, and then matching those needs with the capabilities of those across a broad network. Whether that network is your own, the network of an outside connector, or some combination of both… putting a process in place to identify opportunities in this way can give you fresh insights into growing your business that may have been hiding in plain sight all along.
Jonathan Adelson is the Founder & CEO of Adelson Strategies www.adelsonstrategies.com a global international business development and strategy firm that assists smaller to middle market and international private equity funds with business development support and identification of acquisition targets. To learn more about ways we can help your private equity fund get the most out of our collective global networks, contact us at info[at]adelsonstrategies.com.
© 2016 Courtesy of Adelson Strategies – a member of EACC NY