The success of the private-equity (PE) sector has created new challenges and is fundamentally changing the way private equity creates value:
- The attractive returns generated by private equity have attracted funds for new investment; more and more money chasing a limited supply of targets has complicated the task of finding attractive investment opportunities at the right price.
- The times when PE firms could create value through financial reengineering or massive cost-cutting are long over; today, the key to creating value is systematic performance improvement that generates top-line growth in a firm’s portfolio companies, in addition to margin improvement.
- Many of the acquisitions made by PE firms at the height of the pre-financial-crisis equity markets are now coming to maturity in a less forgiving market environment; this shift in market expectations has made preparation for a successful exit a necessary new capability for PE firms.
BCG partners with the world’s leading private-equity firms on every step of the PE value chain—from acquisition to exit:
- Lead generation and assessment. We provide our PE clients with real-time access to BCG’s global network of industry experts and offer rapid assessment of market and industry dynamics, potential targets, and potential investment theses.
- Due diligence. We start with an in-depth understanding of the industry, sector trends, and asset-specific key issues. From there, we perform detailed analyses of the market and competition, the business case, and the feasibility of the acquisition.
- Value creation. We use field-tested methodologies and tools, customized for the demands of the private equity sector, to support operational improvement and growth acceleration at portfolio companies. For example, we typically start developing a “First 100 Days” operational action plan as soon as a deal has been signed, and then begin working directly on the key value drivers—such pricing or operational improvement—as soon as the deal is closed.
- Exit support. We work with portfolio companies to develop a detailed roadmap for exit support that typically covers the final 500 days before exit and include a comprehensive equity story, systematic vendor due diligence, and even direct support in the sales process.
We are a team of more than 200 professionals dedicated to serving leading private-equity firms and their portfolio companies. We bring a deep familiarity with the challenges facing private equity, developed through more than 1,000 projects over the past five years. And we combine that with the extensive experience of BCG’s industry practice areas and the firm’s broad functional expertise in areas ranging from strategy and corporate development to operations and organization.