Private Equity - network for UK PE people
Discussion
ev_buyer said:
Hello,
I don't work in PE but I'm interested in how PE companies work.
Thats pretty simple to summarise -I don't work in PE but I'm interested in how PE companies work.
1) They wine and dine you, make lots of promises and agree to invest / buy into your business.
2) They spend months distracting you and your employees with multiple streams of due diligence.
3) They use this DD to chip you on the price/terms just before signing the deal.
4) Then they fire your CFO and make you pay a portfolio company to find THEIR replacement.
5) Then they look to load your business up with as much debt as possible.
6) They force you to spend company funds on various specialist consulting firms to tell you how to run your company.
7) Despite having never run a business, they use an excel spreadsheet to tell you how to run yours.
8) After a few years, they sell your company to another PE house, but you are forced to go along for the ride because they will lock you in with an earn out.
9) Your stress levels increase to such an extent that you eventually resign from your own business.
I think that pretty much sums it up.
cashmax said:
Thats pretty simple to summarise -
1) They wine and dine you, make lots of promises and agree to invest / buy into your business.
2) They spend months distracting you and your employees with multiple streams of due diligence.
3) They use this DD to chip you on the price/terms just before signing the deal.
4) Then they fire your CFO and make you pay a portfolio company to find THEIR replacement.
5) Then they look to load your business up with as much debt as possible.
6) They force you to spend company funds on various specialist consulting firms to tell you how to run your company.
7) Despite having never run a business, they use an excel spreadsheet to tell you how to run yours.
8) After a few years, they sell your company to another PE house, but you are forced to go along for the ride because they will lock you in with an earn out.
9) Your stress levels increase to such an extent that you eventually resign from your own business.
I think that pretty much sums it up.
It's PE bingo!1) They wine and dine you, make lots of promises and agree to invest / buy into your business.
2) They spend months distracting you and your employees with multiple streams of due diligence.
3) They use this DD to chip you on the price/terms just before signing the deal.
4) Then they fire your CFO and make you pay a portfolio company to find THEIR replacement.
5) Then they look to load your business up with as much debt as possible.
6) They force you to spend company funds on various specialist consulting firms to tell you how to run your company.
7) Despite having never run a business, they use an excel spreadsheet to tell you how to run yours.
8) After a few years, they sell your company to another PE house, but you are forced to go along for the ride because they will lock you in with an earn out.
9) Your stress levels increase to such an extent that you eventually resign from your own business.
I think that pretty much sums it up.
Add in :
"Share lots of internal and external communication around how great this will be for employees and customers going forward. Promise anything".
"Make no further investment into the company and stretch everything and everyone to breaking point. Ensure customers struggle to leave by any means necessary and lock in for as long as possible".
It's mainly IT I've experienced and PE "investment" generally means we should switch vendor. The problem now is few are not PE owned.
I'm sure there is good and bad (backed vs owned?) but IMO the UK is being severely damaged by foreign PE. Add in the open arms shown to the tech giants over past few days and it’s like we're giving up on having our own technology companies.
PE is expensive money so it has serious consequences for a company.
A few observations on the original list:
1. Vendor DD and a competitive process can both maximise value and shorten the external process.
2. The process ultimately depends on how attractive the target is - e.g. high growth tech versus manufacturing co. struggling to pass on costs.
3. You need to prepare well before the process. Having a good CFO aligned with you will simplify matters.
4. The CFO and you will need to run the business through the numbers. Be it quarterly covenants or cash flow to meet the funding structure.
5. All PE backed companies are for sale.
6. If you’re more than hitting your EBITDA numbers, it’s fine, but if not, the leverage and PE middle managers will soak up a lot of time and energy.
7. Be clear what you want from any transaction. A lot of CF advisers are close to PE and having lots of future transactions is great for them versus a once and for all trade exit.
A few observations on the original list:
1. Vendor DD and a competitive process can both maximise value and shorten the external process.
2. The process ultimately depends on how attractive the target is - e.g. high growth tech versus manufacturing co. struggling to pass on costs.
3. You need to prepare well before the process. Having a good CFO aligned with you will simplify matters.
4. The CFO and you will need to run the business through the numbers. Be it quarterly covenants or cash flow to meet the funding structure.
5. All PE backed companies are for sale.
6. If you’re more than hitting your EBITDA numbers, it’s fine, but if not, the leverage and PE middle managers will soak up a lot of time and energy.
7. Be clear what you want from any transaction. A lot of CF advisers are close to PE and having lots of future transactions is great for them versus a once and for all trade exit.
I'm on my third PE-backed deal.
You'll get no complaints from me - essentially high risk / high return leveraged capital. When it works its the best risk profile out there. When it fails it has the capacity to fail spectacularly
If you've experienced many / any of the list of issues shown above, you (or your boss) chose the wrong partner
You'll get no complaints from me - essentially high risk / high return leveraged capital. When it works its the best risk profile out there. When it fails it has the capacity to fail spectacularly
If you've experienced many / any of the list of issues shown above, you (or your boss) chose the wrong partner
I’m involved with a number of PE funds as well as VC’s and Family Offices dealing with portfolio advisory and investment.
We’re in the process of launching a variety of events and meets for the car interested people within these groups to chat about work, life, cars.
We’re North based for meet-ups but this will include events like BTCC, F1 and also interesting things like driving tours, ice driving, Salon Prive etc…
We’re in the process of launching a variety of events and meets for the car interested people within these groups to chat about work, life, cars.
We’re North based for meet-ups but this will include events like BTCC, F1 and also interesting things like driving tours, ice driving, Salon Prive etc…
Hi all
Thanks for all the comments and replies so far, apologies I did not respond sooner! Its been a very busy period at my current PE backed SaaS business.
Great to get some people commenting on their PE experience and also those who may be looking to work with PE.
The aim was to try and build an informal network to help each other as much as we can. So, I will start with a bit of my background and how I may be able to help others....
20+ years working for PE portfolio companies
Worked with around 10 different PE houses
On the Board and working with the PE guys to try and grow the business
Very used to dealing with them and how they work, what they think and how to communicate with them
B2B Software (SaaS) companies
Working as CIO / CTO / CPO / Advisor
Been through 5 exits and many acquisitions
Happy to just chat about experiences etc, drop me a direct message or comment in here.
Hoping we can get some good engagement!
Thanks
Peter
Thanks for all the comments and replies so far, apologies I did not respond sooner! Its been a very busy period at my current PE backed SaaS business.
Great to get some people commenting on their PE experience and also those who may be looking to work with PE.
The aim was to try and build an informal network to help each other as much as we can. So, I will start with a bit of my background and how I may be able to help others....
20+ years working for PE portfolio companies
Worked with around 10 different PE houses
On the Board and working with the PE guys to try and grow the business
Very used to dealing with them and how they work, what they think and how to communicate with them
B2B Software (SaaS) companies
Working as CIO / CTO / CPO / Advisor
Been through 5 exits and many acquisitions
Happy to just chat about experiences etc, drop me a direct message or comment in here.
Hoping we can get some good engagement!
Thanks
Peter
pete_esp said:
I have a company that will be looking for investment pretty soon. I would love access to a network of active investors.
Thanks for the comment. Having been through this I may be able to help on the potential upsides and downsides to this. Cannot send you a message direct though
stub101 said:
I m involved with a number of PE funds as well as VC s and Family Offices dealing with portfolio advisory and investment.
We re in the process of launching a variety of events and meets for the car interested people within these groups to chat about work, life, cars.
We re North based for meet-ups but this will include events like BTCC, F1 and also interesting things like driving tours, ice driving, Salon Prive etc
Sounds really interesting! Please do share any details when you can We re in the process of launching a variety of events and meets for the car interested people within these groups to chat about work, life, cars.
We re North based for meet-ups but this will include events like BTCC, F1 and also interesting things like driving tours, ice driving, Salon Prive etc
It's been a busy few months but proud to say another successful exit for a PE backed company I have been helping on their journey to success....
https://www.linkedin.com/posts/petermcnaney_learni...
Really proud of this one!
https://www.linkedin.com/posts/petermcnaney_learni...
Really proud of this one!
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