Bringing in a private equity or growth capital partner is a significant step for any business.
Whether the objective is to accelerate growth, invest in new capabilities or expand internationally, working with the right investor can play a critical role in shaping the next phase of development.
This article outlines what management teams should expect when engaging with private equity, how to prepare for a growth capital transaction and what to consider when selecting the right investment partner.
Having recently supported a UK-based pharmaceutical services business on securing growth capital to support its expansion, it is clear that the most successful outcomes are driven by clear positioning, strong preparation and alignment between management and investor.
It’s Not Just About Capital
Private equity is often associated with funding, but the most successful transactions are not driven by capital alone.
Management teams should consider what the investor brings beyond funding, including sector understanding, strategic input and the ability to support long-term growth.
The strongest outcomes are achieved when capital is aligned with a clear strategy and a shared vision for the business.
Choosing the Right Private Equity Partner
Not all private equity investors operate in the same way.
Some will bring specific sector expertise, others may have a greater focus on operational improvement or bring international expansion credentials. Others may be more experienced in the buy and build model. Some investors will take an active role in the business, while others adopt a more supportive approach.
Key considerations for management teams include cultural fit, approach to governance, appetite for further investment and alignment on long-term objectives.
Whilst private equity are having to be more flexible than ever in terms of their approach, it is critical that management have considered whether they are looking for a minority or majority position post-investment.
The right partner should act as a strategic investor, not just a source of capital.
Preparing for a Growth Capital Transaction
Preparation is one of the most important factors in a successful fundraising process.
Management teams should be clear on their growth strategy, market positioning and use of funds before engaging with investors.
It is also critical that the business has a robust set of financial forecasts in place. Ensuring that these have been reviewed both internally and externally (by a Corporate Finance Advisor) will ensure that they stand up to an investor’s due diligence process.
In practice, businesses that are well positioned and can clearly articulate their strategy and financial plan are more likely to attract the right investors and achieve stronger outcomes.
Managing the Process
A private equity investment is a structured corporate finance process involving investor engagement, due diligence, legal structuring and negotiation.
For management teams, this can be complex and time-consuming alongside running the business.
Working with an experienced corporate finance advisor is critical in managing the process effectively and ensuring the business is presented appropriately throughout.
Paul Stott, CEO of Seda Pharma, recently talked about the value of a Corporate Finance advisor through a private equity process:
“We appointed Logros because we wanted an experienced deal advisory team who could support us through a time-critical transaction, positioning the business for its next phase of growth. The Logros team provided crucial input into our financial plan and around the negotiation of Heads of Terms prior to moving into the completion phase.
During the completion phase, their partner-delivered, hands-on approach made a real difference, providing clear advice and guidance on a process that involved multiple workstreams. Their collaboration with our legal advisers was critical in us meeting the timeframe driven by a requirement to purchase the manufacturing premises and has ensured that we have the right long-term partner and financial structure with BGF.”
Aligning on the Future
A successful private equity partnership depends on alignment beyond the transaction itself.
This includes growth plans, investment priorities, management structure and exit strategy.
Clarity at the outset supports a more effective partnership and reduces the risk of misalignment later.
Final Thoughts
Private equity and growth capital can be powerful tools for scaling a business, but a successful partnership is about more than securing the initial funding.
For management teams, the focus should be on preparing properly, selecting the right partner and ensuring alignment on long-term objectives.
When these elements come together, a partnership with private equity can drive long-term value creation.
Next Steps
Logros Advisory Partners offers a partner-delivered corporate finance service to Management Teams looking to raise development capital. If you are considering a fundraise or engaging with private equity investors, please get in touch to explore your options or discuss how we can support you.
