why private equity vs. other financing

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Why PE vs. Other Financing?

Large Banks Focus on “Mega” Deals

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• Mid market companies ($50M - $500M) – Left underserved

– In need of capital & advisory services

• PE culture is performance-oriented– Drives operational improvements

• Upside for investors – higher

valuations

What PE Firms Offer

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• PE firms have:– Network of advisors– Financial acumen– Management

expertise– Performance culture

• Determination to do everything possible to increase value

• PE firms buy companies as “portfolio” investments– Analyze– Fix what’s wrong– Grow the business– Increase company

value

PE-Owned Management

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• Can make tough decisions for longer-term growth

• Free of constant scrutiny– Investment analysts– Quarterly reports– Media

• Not restricted by government regulations, such as Sarbanes-Oxley

Benefits of PE Financing

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• PE manager align interests with those of portfolio company– Portion of exec pay tied to performance

– Senior managers may be invested in deal

• Viable businesses with growing markets get attention needed to thrive

• PE firms provide extensive network of contacts that can open doors

More Benefits of PE

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• PE-owned companies are often:– Better managed– More profitable

• PE-owned companies outperform comparable publicly-traded companies – Sales growth, cash flow, profitability &

productivity

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