Business growth requires effort and insight. In many cases, some of that needs to come from someone outside the organization. Whether a business owner is looking to maximise potential by diversifying their offerings or reaching new customers, a private equity advisor can show them the way. However, finding the right match is the challenging part.
Not only can working with the right advisor show someone how private equity works when it’s done right, but it can also make the strategies and processes more effective. While on the surface, it can seem that advisors who are the best negotiators or have the most contacts are right, there are a few more factors that can make the partnership even smoother. Let’s explore various points to consider before choosing where to get private equity advisory services.
Five Tips for Choosing the Right Private Equity Advisor
Choosing a private equity advisor is about so much more than maximising returns. With the right partner, a business can optimise its market position, operational efficiency and overall business performance. Many firms will promise to help find value, but whether the two parties have the same definition of the word remains to be seen.
Finding the right fit requires some reflection about the company and its values. Business owners need to do due diligence when it comes to potential advisors so they know just who they’re getting involved with. By focusing on these five aspects, anyone can narrow the selection and pick the best candidate.
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Ensure Goals Align
A useful starting point is to ask why private equity investments are wanted. Business leaders should go beyond the financial aspect to think about additional goals and values and how this move fits into the picture. It’s also good to identify any dealbreakers, such as green policies.
Besides looking at the bigger picture, it’s worth being more specific about the reasons for growth. These will be useful deciding factors when meeting with prospective advisors. One example is the exit type–35 per cent of exits in 2023 divestments were through sale to another private equity firm, so it’s important to decide in advance if that’s on the table.
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Ask for References
Employees aren’t hired without hearing what someone else thought about them, and working with a private equity advisory service is no different. Everyone wants to make a good first impression, but it’s what happens afterwards that matters. That’s why it’s key to hear what others have to say first.
A good starting point is to see if there are any existing client testimonials. Next, identify similar businesses and meet with someone there who had contact with the prospective advisor, asking about how they communicate and handle different situations.
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Consider Control
Control doesn’t need to be a contentious aspect as long as all parties consider how much input is needed. In some cases, it might be preferable to select a firm that’s more hands-on, which means they’ll play an active role in decision-making. It can add a boost of expertise and take the burden off the organization.
Alternatively, there are more passive firms that won’t lead the strategy; instead, they’ll chip in and speak up to guide the decision-making process. Discussing reporting, meetings and involvement early on will determine what kind of advisory firm is needed and which one will get the balance right.
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Check Their Experience
One of the biggest concerns businesses have when choosing a private equity service is whether they’ll be in safe hands. One of the best ways to check is to look at their overall track record. When comparing two options, knowing that one firm completed 10 deals and the other did more than 20 can be a key factor.
Let’s take Acquinox Advisors as an example. The company has completed transactions totalling over €250 million, has more than 50 years of combined experience, and has overseen 28 successful deals. Not only is this an impressive track record, but the firm is honest and transparent about its experience and what it offers.
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Make Sure the Personality Fits
Once a decision is imminent, it’s worth finding out which advisor will be the company’s main point of contact. After all, the company may be a fit, but the point person might not suit everyone’s business or communication style. A face-to-face meeting or a video call with the advisor can quickly show if their personality fits and their background best suits the company’s needs. On top of that, seek a management style that will deliver what the process needs and complement what the company’s leaders bring to the table.
Get Connected
Focusing on these five factors can make the advisory process much smoother. The right private equity advisory services should amplify a company’s efforts. One key way Acquinox Advisors does that is by providing access to its extensive network of industry connections. Together, all parties can come together and figure out the best steps to take.