Finding the right deals to generate superior returns for limited partners is ever more challenging for private-equity funds, as they face competition from each other and from new entrants such as hedge funds.
For the past three years, we have served over 100 private-equity and venture-capital clients, from the largest global buyout funds to mid-market investment houses, across the world.
Record amounts of affordable equity and debt capital raised by private-equity, venture-capital and hedge funds have created a tremendous pool of capital pursuing scarce deal opportunities worldwide. With acquisition multiples on the rise, it is increasingly difficult to find "cheap" deals and generate superior returns from classic financial-engineering (leverage) strategies. Successful investors must focus on operational improvement of their portfolio companies, something we at Arthur D. Little intimately understand.
We serve our private-equity clients in all the key areas of their investment process. Our services focus on the needs of both the fund managers and the individual portfolio companies:
Overpaying for deals is easy when deal flow comes from traditional “auctions”. Our most successful clients rely on us for proprietary deal flow generated by our comprehensive industry-screening methodologies.
We start with a pool of over 1,000 companies in a given segment, which we then refine through primary research on each individual company, applying our client’s selection criteria.
Ultimately, we deliver a “short list” of attractive targets that could be approached with an investment offer, as well as an industry “primer” which details key trends and dynamics shaping the targets’ business environments.
Rigorous due diligence has never been more important than it is today, when every targeted company's business is affected by a multitude of complex factors.
Our due-diligence projects answer the following four investment questions:
As our clients like to tell us, the key differentiator for us is that we give them an actionable "business plan" for their investments, even before they close on the deal.
Actively managing your portfolio is the only way to gain superior returns today. Whether you already have an underperforming portfolio holding or have just acquired a new company, it is never too early to extract operational improvements.
At Arthur D. Little we deliver hands-on, pragmatic, EBITDA-focused improvements, working side-by-side with the portfolio companies’ line managers at every level. Our typical projects include:
Strategy and sales growth, helping companies assess their current and new markets, define product and service offerings, and improve the way they respond to customers
Operational improvement projects, ranging from lean manufacturing, to Six Sigma, to BPR (business-process re-engineering), to supply chain management
Organizational design studies, helping companies align their internal structure with their strategies and bring objective performance metrics in line with world-class benchmarks
Our advice is sought in a variety of situations to assist with strategic decisions, in support of merger-and-acquisition negotiations, for accounts preparation (e.g., goodwill impairment testing), or in support of litigation.
We employ the valuation techniques most appropriate to the specific situation, which may include multiple comparisons, discounted cash-flow analysis and options pricing, with our work differentiated by our understanding of the economics of the underlying businesses.
Post-transaction activities to secure value are extremely complex to handle and can potentially frustrate top management, the investment community and – most importantly – the companies’ employees, who have to take the role of integrators and change agents.
To achieve long-term success, stringent leadership throughout the post-transaction process is essential, stressing each single issue carefully but pragmatically.
With our long history of successfully supporting companies in mergers, acquisitions and alliances, we can help our clients to manage post-transaction integration activities to meet specific industry and company priorities.
Working-capital release can be an important generator of returns to owners or a source of funding for growth.
We have experience in assisting companies, particularly those with multiple business units spread across many geographies, to identify opportunities to release cash and then successfully execute the working-capital release plan.