Private Equity: A New Approach
The private equity (PE) market has changed substantially in the recent past. “To maximise return from any transaction you have to do things differently now, it’s not just about leveraging,” says Rustom Kharegat, who last summer set up the transaction services practice at the global business advisory firm FTI Consulting.
“Today you really need to do something exceptional with the business and more people are beginning to realise this. You will have to change the business operationally or restructure its basic processes to release value.”
“Clients want someone with deep experience, value-adding initiatives and ideas that can help them to plan the next stage of a business’s growth”
Having worked in PE for more than 20 years, Mr Kharegat is well placed to manage such trends and offer perspective on recent developments. For example, he mentions the decline in the number of IPOs (initial public offerings) taking place and the impact on PE.
“It’s created an opportunity because people who are looking to exit have fewer options and you’ve got PE houses stepping in to fill the void,” he explains. “But now when a PE house wants to exit, the choices are more limited. It might be forced to sell to another house so we will see more secondary and tertiary buyouts in weak IPO conditions.”
Houses are having to work to build more value into the business to prepare for exit, something that Mr Kharegat and his team specialise in.