Navigating the mergers and acquisitions landscape has become more complex as organizations, operations and business models have matured. Choosing the right fit for growth and expansion—and then executing on the deal—requires a team with both industry and M&A expertise.
The right team will offer comprehensive tactical and industry expertise and help navigate the maze of capital markets —performing the requisite due diligence to protect business interests.
Meet Your Strategic Growth Partner
The private equity industry is maturing. There were nearly 1,000 acquisitions in the first half of 2017, with healthcare in particular seeing a great deal of activity, according to a recent article in The Economist. In a shifting M&A environment that The Economist describes as “a stealthy, but significant, reshaping of the financial ecosystem,” the expertise and infrastructural support of a trusted sponsor can add significant value.
Sponsors bring a particular cross-functional understanding of the salient issues in both M&A and particular industries. They use these insights to add value to investment strategies before a deal is even on the table by focusing on tactical goals such as locating undervalued, low leverage opportunities.
By considering a longer investment horizon, where the focus is on prioritizing financial and strategic goals versus simple operational needs, growth becomes more about transformational deals that can help expand into new technologies and markets. It's less about absorbing a competitor or becoming a larger company, and more about accessing new talent while setting the business up for long-term success. Through that lens, sponsors can help elevate growth strategies with expertise, innovative thinking and actionable ideas.
The Potential for Family Offices
Family offices in particular can benefit from leveraging financial sponsors as they grow in size and popularity. With $5.1 trillion in assets as of 2015, family offices typically have the expertise in the industries they target and can often avoid tying up capital in blind pools— but they may still need help with sourcing deals, creating post-investment value, and engineering desirable exit strategies where applicable.
Because of their experience with dealmaking, financial sponsors can help in this space. During the deal, sponsors are able to see beyond the single transaction into the full business strategy. They can help gain access to additional capital, if needed, and uncover sophisticated value creation scenarios that can lead to more beneficial deal terms.
What to Look for in a Sponsor
Ideally, a financial sponsor provides full access to a suite of capital markets and corporate banking capabilities across the investment life cycle to see deals through to completion.
They ask the right questions to get to dynamic solutions. For example, identifying the best end-game opportunities with key questions such as: When does it make more sense to effect strategic operational changes as opposed to flipping the entire capital structure?
By working within and outside the typical private equity templates, financial sponsors can move with agility to deliver the advanced solutions that match today's complex M&A landscape. As the private equity industry continues to mature, earning healthy profits requires more proactive, collaborative strategies -- sponsors can facilitate by sourcing creative prospects, developing sophisticated implementation and establishing a vision for the long term.