ARE YOU EXIT READY?
What does unprecedented money seeking good deals mean for you and your emerging growth or lower mid- market business?
By Tony Cord and Brent Sapp
The amount of dry powder – money raised but not yet invested – could hit $1 trillion by the end of year in private equity alone, after reaching $963 billion in July, according to researcher Preqin Ltd. Today we have unprecedented cash feverishly looking for good deals, with EBITDA floors now below $2.5M and multiples continuing to rise as the window for PE firms to invest their managed capital narrows.
So, what does this mean for your emerging growth or lower middle-market company? First, a couple definitions - at Newport Board Group we use the following parameters based on hundreds of client engagements:
Over the past decade in the US, private equity has essentially consolidated a large portion of the most promising upper middle market companies, acquiring platform companies and resorting to bolt-on deals to get investor cash out the door and deployed. Given those realities, plus the aforementioned current gobs of uninvested cash, deal makers are looking for the best opportunities including both lower mid- market and emerging growth companies.
What does that mean for you as a board member or C-suite leader of a company in one of those spaces?
Our Newport partner, Doug Tatum, makes an interesting observation about the primary motivation in the capital markets by posing the following questions:
Is your company “exit ready”? And, do you know how to reduce a PE firms’ perceived risk regarding your company so that you can eliminate due diligence barriers and take advantage of unprecedented multiples?
What better time than now to get your “inner circle” in the same room and discuss the following essential operational questions covering many of the risk factors most PE firm’s want to eliminate with their portfolio companies:
MAKE IT HAPPEN
Using two decades of field experience and academic research across thousands of growth companies, the Newport team has created an effective tool to address these key questions and equip you with strategic intelligence to make better decisions, maintain your growth momentum and get your company exit ready. We call our tool the Benchmark Button.
The Benchmark Button takes 30 minutes online to respond confidentially to a set of questions creating for a CEO and her or his “Inner Circle” an insightful report that helps you control your company’s agenda.
Going into Q4, Newport partners are actively socializing the Benchmark Button to CEOs, boards and their teams as a way to help them get exit ready and grab their share of dry powder. Armed with a confidential report of your company’s alignment, you’ll be well-equipped and confident to talk with your board, legal, accounting, bank and other advisers about an exit that could monetize the maximum value of the asset you and your team have built. The bottom line? Now may be a great time to get ready for your exit, and doing the necessary strategic alignment internally can make your exit even more fruitful.
Tony Cord and Brent Sapp serve as Regional Managing Directors at Newport Board Group, a national firm of partners who help you navigate strategic and operational issues to achieve sustained growth. Write us: firstname.lastname@example.org and email@example.com