Win the Right Deal with the Right People
The impact of an unusual year is still being felt across the private equity industry. Fewer deals were closed in 2020 and total investment numbers reflect bigger deals instead of more deals. Competition is at an all-time high.
Bain & Company’s 2021 Global Private Equity Report covered some important points on current PE trends.
Today’s valuations leave little room for error. Soaring asset prices in sectors like technology mean that multiples for deals getting done today are at or near record highs. The simple math says that GPs buying companies at these prices will have to generate more value if they are to make good on return expectations—and they will have to do so in a highly volatile and uncertain business environment. A Bain analysis of hundreds of funds in which we coinvest shows that multiple expansion and revenue growth (not margin improvement) are by far the biggest drivers of PE returns. Funds will have to find ways to improve that mix if they aim to replicate the returns they’ve posted over the past decade.
Apex Leader’s River Guides help your firm verify the right valuation to help you succeed or dodge a bad deal. You can be confident sitting down to negotiate when you have the right advisor on your team, at the table with you. Once you meet our River Guides, they now become a part of your network. You can call on them at any time, helping you to execute your thesis and drive portfolio company growth, ultimately winning more deals and increasing return.
What we have learned over the last year or so is that deep expertise is more important than ever. Win the right deals by adding the right people to your team.
Deep sector and subsector expertise has never been more important. The better you know the sectors you are investing in, the better you’ll understand how they are going to change and how you can take advantage of it. Firms need in-depth intelligence on how the recovery will unfold in a given sector and where the ground has shifted. Many industries have changed fundamentally in the wake of Covid-19 in ways that can alter profit pools. Customer expectations may have evolved; disruptive innovations may have been pulled forward. The firms that can spot change first and build those insights into the PE value chain will have a distinct advantage in the post-Covid future.
Apex Leaders allows you to enter the deal fully informed on various industries. Connecting with our River Guides will lead you to success within industries you may have never had the confidence to explore before. Allow Apex Leaders to validate your acquisitions so that you’re achieving the best deals with the best return.
Read Bain & Company’s compete report here.
Invest or Walk
Adopt a sector thesis approach to thrive in technology dealmaking