Private Equity Thesis

Private Equity Thesis-43
The firm redesigned its deal scorecard to ensure that it would explicitly assess the fit between the deals that it saw and the subsectors that the firm determined it would target.

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The firm dug into the themes, breaking them down into trends that would be likely to play out at a country level and the impact that they would have (both positive and negative) on specific industries and subsectors.

Capitalizing on these insights, the firm redirected its sector focus, concentrating on those sectors that it believed would benefit the most from the new trends and where it was confident that it had an ability to invest.

As it took its evaluation of the specific effects of each of the themes to a deeper level of analysis, the trends team undertook a comprehensive market-by-market investigation of spending patterns, supply chain implications, competitive dynamics and business cycle sensitivity on sectors representing a wide range of goods and services that fit with the firm’s experience.

Applying the guidelines that the in-house analysts developed to codify each theme, the deal teams concentrate their hunt among companies and sectors poised to benefit from opportunities that track the macro theme’s trajectory.

Joe Trustey, managing partner of private equity and venture capital firm Summit Partners, describes the tool in one short sentence: "It tells me why I would want to own this business." Perhaps you're rolling your eyes and saying to yourself, "Well, of course our company uses an investment thesis!

" But unless you're in the private equity business—which in our experience is more disciplined in crafting investment theses than are corporate buyers—the odds aren't with you.Meanwhile, the analysts continue to track the macro themes’ emerging impact as well as investigate potential new ones to feed fresh insights to the investment teams.The firm is now deploying its macro insights as a central part of its sizable portfolio, with its teams aligned around its investment themes across all geographies and asset classes.In Booz Allen Hamilton's 1999 review of thirty-four frequent acquirers, which focused chiefly on integration, unsuccessful acquirers admitted that they fished in uncharted waters.They ranked "learning about new (and potentially related) business areas" as a top reason for making an acquisition.The next step was to embed the macro perspectives that the exercise developed in the firm’s culture and deal processes.Armed with the list of sectors that the firm decided it would focus on, deal specialists communicated them to the financial intermediaries with which they worked and broadcast them to the world by featuring them on the firm’s website.An investment thesis is the analysis performed by a buyer to assess a potential acquisition against an established set of investment criteria.The investment thesis may be formally written up as a document or slide presentation to the buyer's investment committee for deal approval.As outlined in Bain & Company's recently released here is how two very different PE firms developed thematic investment programs and built them into their investment-sourcing and deal-vetting processes. Lacking the resources to build a dedicated team to sort through the vast array of social, technological, economic and geopolitical trends that will unfold over the coming decade, the firm called in outside experts to help structure its investigation.Capitalize On Rented Expertise The managing directors at a midsize PE firm that focuses exclusively on growth-oriented middle-market investments in the U. Through an iterative process, the consultants helped identify eight themes that they and the firm believed would influence the global economy going forward.


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