The Ledger No. 39: Private Equity Talent

March 2, 2022 Sarah Dameron

Private equity talent working on year report

Welcome to The Ledger where we sum up the latest finance and accounting news and trends for you. On this week’s entry, we’re diving into the topic of private equity and how talent is the focus in today’s market. Read on to explore how midsize companies can increase efficiency with a growth-minded culture and business strategy, how private equity companies will lead the way in the post-covid economy, how to make a successful M&A deal and why PE firms are looking at talent before making a deal.

The Weekly Ledger about private equity talent

Increase Efficiency with a Growth-Minded Culture and Business Strategy

The need to recover from the pandemic and grow your company is a top priority for accounting and finance leaders. But how can those leaders reach those goals? The fastest way is through mergers and acquisitions. However, banking on this type of opportunity comes with own set of complexities. And according to Bruno Domingues, CTO for Financial Services Industry at Intel Coporation, “With all the moving parts, removing complexity is easier said than done. The complexity of rationalizing technology investments and applications can distract from bigger issues. This risk can be reduced by relying on standards-based technologies and proven infrastructures.” Another thing to consider with M&A is how to utilize it properly. Companies are starting to realize that automation can help them manage data, analyze that data and streamline simple processes. The truth is, organizations are better off investing in an infrastructure that reduces risk and minimizes technology obstacles.

To learn more about how midsize companies can drive efficiency by capitalizing on mergers and acquisitons, head over to Forbes.com to read the full article.

How Private Equity Can Help SMEs Overcome Setbacks Caused by the Pandemic

It’s no secret that small and medium-sized enterprises have been the driving force of the global economy, with 62 percent of net new jobs in the U.S. created over the past few years. However, the pandemic has created a rift in the market and SMEs are now struggling to keep their title as the number one source of ecomonic growth. Here are three trends that are causing a few challenges for SMEs:

  • Inflation of materials and goods driven by geopolitics and fragile global supply chains. U.S. supply chain disruptions are back to their highest 2020 levels.

  • The Great Resignation. Many workers are ready to call it quits and companies are struggling to attract new employees in an already limited talent pool.

  • A need for investment. As the Fourth Industrial Revolution makes headway, businesses will need to make an estimated 6.8 trillion in digital transformation investments by 2023.

So how can SMEs power-through these hurdles?

The answer is private capital. Joining a private equity firm’s network unlocks access to supplier networks and procurement best practice which can improve profitability by 10-20 percent. Private equity can also take care of the talent scarcity by leveraging a network of recruiters and change the positioning of the company to attract more (and better) talent. Lastly, private equity can help with the investment problems that SMEs are experiencing – they can help fund the necessary transformations for the Fourth Indistrial Revolution.

To dive deeper into how private equity will save small and medium-sized enterprises during a downturn, check out the full article on weforum.org.

Steps to Create a Successful M&A Deal

How can a business prepare for a lucrative M&A deal? Preparing means rethinking your negotiation skills, asking the right questions and bringing the best people to the table. Here are 10 steps to ensure a successful deal:

  • Create an acquisition strategy. What are you hoping to gain?

  • Build a long list of targets. Utilize industry association lists and LinkedIn.

  • Refine target criteria and evaluate potential target companies. Consider both deal size and type.

  • Make initial contact with targets. Find the right person to speak to such as CEOs, board members, heads of strategy or heads of corporate development.

  • Evaluate target. Gather as much information on the potential sell-side as possible by listening.

  • Negotiate purchase price/offer. Write a well-structured letter of intent to make your initial offer.

  • Conduct due diligence. Examine assets, operations, legal matters, etc.

  • Finalize purchase and sale contracts. The purchase contract is binding, so be sure there are no errors.

  • Close the deal. This is followed by an exchange of the company’s share certificates.

  • Integrate the companies. Ideally, this step should begin at the start of the deal.

For more on how to create a profitable deal, read the full article on DealRoom.net.

Talent Takes Center Stage in Private Equity

As waves of turnover continue to ripple across every industry, many PE firms are looking at how companies retain and attract top talent. As Matt Brubaker, Chief Executive at FMG Lending, once said, “The Great Resignation was like the great wakeup call.” As of last December, the number of workers that quit was 4.3 million. These sudden resignations have private equity firms rethinking deals and opportunities, especially ones that lack an HR department or a clear plan to retain current employees. A 2021 April survey from AlixPartners found that 69 percent of respondents ranked human capital as a top priority during disruptive times. At this time, many firms are focusing on employee retention rather than cost-savings. The reality is, this hiring situation is forcing many organizations to adapt to the changing times and create an employee retention strategy that keeps talent for the long-haul.

To explore why private equity firms are only backing deals with companies that put employees first, take a look at the full article on WSJ.com.

Need help finding the right talent for your portfolio company? Personiv can help.

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