Every business is different and our 150+ investments have truly been 150 very different journeys. This can make it hard for entrepreneurs looking at a private equity funding process to envisage their road ahead. But you don’t need to know the route to understand your direction, so we’ve brought together some key stepping stones to draw together what an investment process might look like and the key questions along the way.
The investment process
1The big questions
Not all business owners face the same challenges, but they are often asking themselves the same questions. How can we grow sustainably? How can I provide a more secure future for myself? Where should we be investing our time?
The questions for the process are normally the catalyst for another – is private equity right for me? We try and make sure that we can understand and answer all your questions at the start of the process to make sure we both know it’s a good fit and that we’re best equipped to help you.
2How do you find the right private equity partner?
Each private equity firm is different, but it’s undeniably hard to tell us all apart. We believe there are a few key criteria you should be demanding from your investor:
Our experience is our capital
We’ve learned from each of the 150 companies we’ve worked with, both from our mistakes and our successes. Your investor should be able to bring to bear relevant experience from their investments and be honest with you about what worked and what didn’t.
Alignment of ambition
Whoever you choose to work with, it’s a long road ahead and you can’t be travelling it in different directions. Whether it is how you work – i.e. do you want someone hands on or someone who is happy to sit back – or where you see the future of the business, being aligned enriches your chances of success and also the excitement about what you’re building together.
To make sure we have that alignment, we take time to really understand your business and make sure that we’re on the same page. Having been on that journey with over 150 management teams means that we have empathy with the challenges that come with running a business, but we firmly believe two heads are better than one when it comes to finding the right path ahead.
We will set a high bar on what we think your business can achieve, and if we’re the right private equity investor for you, we know you will too.
Expertise
Long gone are the days when private equity investors just injected capital and waited for businesses to grow it for them. You should be asking about whether they have in-house capability to proactively help you create value in your business. And if they do have in-house expertise, a dedicated resource, and relevant for your business needs. Livingbridge’s growth acceleration team is an example of such a team, bringing market-leading expertise to support our investees in areas such as talent, customer acquisition & retention, technology, data & insight, M&A and internationalisation.
Make sure you meet these teams, work out if their capability really is available for you to use and what they can bring. This may well be one of the key deciders for you about who you work with so make sure you get into the nitty gritty about what it will really mean for you and your business.
People
All these things are important, but the one that will make the most difference to you is the people you will be working with. It’s really hard to work with people you don’t like. And, you’re going to be seeing a lot of each other. Make sure that you trust whoever you pick to be honest with you, believe in their conviction in your business, and frankly, ensure you get on. It can’t be underrated.
To make sure you get this right, try and meet as many people as possible, and understand who you will actually be working with. At Livingbridge we think continuity is vital, so we aim to make sure that the people you meet in the deal process will be the ones you’ll be speaking to during investment.
And if that only tells you so much, speak to our investees! A measure of our success is the quality of our relationships we build – they will tell you it’s not always easy, but we do things the right way and deliver what we say.
3Get in touch
We love to hear from business owners. If you, or someone you know, has a great business then please do get in touch – we’re always happy to have a conversation!
4The deal and due diligence
We’ll make sure we understand your motivations and work with you to create a deal structure that satisfies everyone’s objectives. Because alignment is the most important thing to us we can be pretty flexible around deal structure, taking anywhere from a 5% to an 80% stake.
We know that diligence can be a pain so we make every effort to minimise disruption to you and the business. We make sure that our team of investment professionals can jump on a deal, committing the right resource for an efficient process. From your end, the better quality the financial information and the clearer the reporting, the quicker this stage can be, so it’s well worth getting ahead of this step as early as possible!
5Equipping you with the right tools
By the time of the deal you’ll know a lot of the Livingbridge team and you’ll have worked together to understand what you need to deliver growth.
This means that we can hit the ground running. We don’t follow a rigid playbook – but we will have understood where our expertise can best empower you to deliver on your ambitions.
Find out more about our growth acceleration team
We’re really proud of the people we have at Livingbridge as we’ve seen the growth they’ve helped to deliver time and time again.
6Part of the family
We only back the very best, which means as a Livingbridge investee you will regularly meet our network of over 30 fantastic management teams. We host events throughout the year to make sure you and other senior board members are getting the most out of this network. This can cover a range of topics relevant to your journey, and in the past has covered acquiring more customers, internationalisation, M&A and financial risk and regulation. A valuable perspective is invaluable.
7Your next steps
Like any other investor, there’ll come a time when we’ll be looking to realise the value that we have created together. On average, our investments span c.4 years but we have flexibility to adjust this to fit your business’s situation. We recognise that we are just one part of a business’s growth journey and we work towards an exit together at a time that’s right for your business, whether you’re choosing to stay in the business or exit alongside us.
Whether it’s an IPO, a sale to trade or another private equity house, we know how to best navigate the routes with minimal disruption and to make sure you get the best outcome.
The bonds we build don’t just last up to the sale. We believe our integrity is demonstrated by the relationships we forge, people who are part of our network and our friends, long after our investment.
Growth accelerators
We’ve seen the transformational impact of the 100+ acquisitions we’ve helped our investees make. So, we’ve invested in our resource and expertise to help deliver ambitious buy and build strategies, supporting the entire process from defining acquisition criteria to integrating the new business.
Working with Livingbridge can also act as a catalyst. You could expand your product range or facilities, or grow internationally, while stopping what’s no longer essential. Now might be a good time to add to your management team, and private equity involvement can help attract top calibre executives.
What I wish I’d known about private equity
We chat to our investee CEOs about their expectations of private equity and what it’s been like for them and their business since Livingbridge invested.