Читать книгу The Private Equity Toolkit - Tamara Sakovska - Страница 35

The real action starts now! It is time to revisit the market map of the key players in the industry you created in step three. What companies on this list could be viable deal targets? Are you aware of any deal catalysts that could facilitate a private equity transaction? As I mentioned before, some companies will be on your list for benchmarking purposes only because they may be too large, publicly listed or already subject to recent private equity activity. Your objective at this stage is to review the market map thoughtfully and create a list of possible deal targets, some of which might consider a private equity investment in fairly short order and some of which will need to be converted into transactions over a period of time. It is a great idea to keep this inventory of deal ideas confidential and not mention any of the companies to anyone outside your firm in order to avoid leaking your proprietary ideas to the competition.

Now is a good time to become more familiar with the companies on your list. The only problem is that they don't yet know that you are looking at them, so you will have to initiate an in-depth coverage of these companies from your desk. Set up alerts that capture valuable information, such as financial reporting, regulatory filings, public statements, press releases, interviews and comments in business and trade journals. Analyze the presence of these companies on the internet and on social media platforms, especially if they operate in a consumer-facing sector. There are data analytics tools that can help you monitor and systematize vast amounts of data, such as the number of posts, quality ratings and customer reviews. If you need help in this domain, there are specialized firms who can provide social media monitoring and who will alert you of any meaningful spikes in traffic.

What are you looking for exactly? You need to stay abreast of any latest corporate developments and watch out for what Teten and Farmer (2010) aptly define as “deal signals.” These are trigger events that might make the company more receptive to accepting an investment from a private equity firm. They include any signs of instability affecting the corporation in the following areas:

 Shareholders: parent company in distress, fighting off a takeover approach, private equity owner seeking an exit, large enterprises selling non-core divisions and any subsequent events following “death, disease, divorce,” especially in family-owned businesses.

 Leadership: changes in strategic direction, succession battles, resignations and new appointments in the top management team or at board level.

 Company performance: rapid growth that cannot be sustained with internal cash generation, production bottlenecks, large capital expenditure needs, persistent underperformance, excessive leverage or limited access to debt sources, or inability to exploit growth opportunities without additional capital.

 Industry developments and pronounced structural shifts: industry consolidation or disruption, increasing rivalry among key competitors, new sources of pressure from customers or suppliers and any significant macro shifts creating the pockets of “economic turbulence” discussed earlier.