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  • SIX BENEFITS OF ADVISOR USE
    July 8, 2019 at 6:00 AM
    If you work in the private equity sphere, you’ve likely heard about the benefits of using advisors in the due diligence process. When making the decis...
  • How to Stand Out in the Acquisition Process
    June 26, 2019 at 6:00 AM
    IntroductionThe 7 Habits of Highly Effective People by Dr. Stephen Covey is an all-time classic for a reason. A critical part of Dr. Covey’s message (...
  • THE NEED FOR SPEED
    July 2, 2019 at 6:00 AM
    One of the biggest challenges private equity faces today is competition among one another. There are thousands of private equity firms with billions o...
  • SIX BENEFITS TO ADVISING
    July 10, 2019 at 6:00 AM
    As an experienced industry professional, you have likely been approached to become an advisor at some point in your career. However, with the daily de...

HOW TO STAND OUT IN THE ACQUISITION PROCESS
July 17, 2019 at 7:00 AM
by Kyle Sale
People crossing street in Vienna.

Introduction

The 7 Habits of Highly Effective People by Dr. Stephen Covey is an all-time classic for a reason. A critical part of Dr. Covey’s message (see Habit 5: Seek First to Understand, Then to be Understood) is that people form opinions based on their own experiences.

Dr. Covey likely didn’t write this book with private equity investors in mind, but his insights are tailor-made to empower funds to stand out in a highly competitive market.

It’s common knowledge that finding good private equity deals right now is hand-to-hand combat. One needs to act quickly in order to stand out. Gone are simpler times when bankers and target companies were hoping to impress, a firm showed-up and did their due diligence, and then cruised to strong returns after divesting several years later.

Today’s market continues to deliver eye-popping bids bolstered by record setting capital inflows. This environment requires differentiation through impressively deep knowledge of not only the industry, but also the target company in detail. With this in mind, there are myriad benefits to using experienced advisors.

In this post, we’ll explain why deep understanding is so important, unpack how to stand out in the acquisition process, and provide a path to get you started.

What is Deep Understanding and Why Does it Matter?

Deep understanding goes far beyond a factual knowledge of an industry or target company. To have truly deep understanding is to be able to assemble the pieces and use your understanding to solve problems and activate new ideas. This is exactly what appeals to target companies in an ultra-dynamic, seller-centric environment.

With dry powder breaking the $1 trillion mark firms must find ways to stand out. Demonstrating deep understanding sets buy side firms apart and establishes them as impactful partners primed to thrive post-acquisition.

Taking a primarily data-driven approach (while a solid foundation) is still only skimming the surface. As the Chinese proverb states, ‘You only catch small fish at the surface therefore think deep.

How to Build Deep Understanding

According to Harvard learning theorist David Perkins, deep understanding requires not only possessing knowledge, but also being able to think about, explain, and apply it beyond the theoretical. So how does this play out in the private equity context?

Many funds have built expertise in specific industries, even niches within industries, and amassed a wealth of experience in their chosen areas. Yet the challenge of getting to deep understanding persists. Practically and tactically operating companies in industry is a much deeper knowledge builder. Industry operators live and breathe their space. They don’t just know their company, competitors, industry trends, etc. -- they have internalized it intimately.

Why not build deep relationships (that get you to deep understanding) with these people? Yes, you can have limited, one way, access to an expert network group or try to self-source advice on LinkedIn. It’s quite another experience to connect directly with advisors who can give your firm the deep understanding you need to stand out to your targets. Even Operating Partners can benefit by extending their network and building a deep bench of active, industry advisors who they can interact with directly as needed.

Summary

With so much money chasing a limited set of deals, private equity investors need to significantly stand out. In this seller-favorable market, companies take a strong bid for granted and are looking for more from their suitors. Those who demonstrate a deep understanding of the industry and target company while arranging the pieces to solve problems and activate new ideas are the firms these companies desperately want to work with. Building and engaging an advisor bench, your advisor bench, is the best way to gain deep understanding.

InquireOf puts you in control of building your advisor bench. We’ve removed the intermediaries and gate keepers to directly connect you with the right advisors. Sign up for a 30 day trial and stand out by fostering the relationships that build deep understanding.

SIX BENEFITS TO ADVISING
July 10, 2019 at 6:00 AM
by Valerie Chisum
Brainstorming sessions can be an excellent way to drive innovation.

As an experienced industry professional, you have likely been approached to become an advisor at some point in your career. However, with the daily demands of your primary occupation, sacrificing your scarce time to advise may not be an obvious choice. While not all advising engagements are created equal, there can be numerous benefits to advising private equity investors:

  1. Expand Your Network
    One of the more obvious benefits of being an advisor is the opportunity to expand your network. As an experienced professional you know the value of forming relationships both within your industry and outside of it. You never know when a connection you make through advising may be helpful down the road.
  2. Share Your Expertise
    When advising private equity investors considering a deal, your industry expertise can be the difference between them missing a great deal or making a disastrous investment decision. Not everyone can have deep knowledge in all areas, which is why experts are needed. It’s rewarding to share your hard-earned industry insight to enable private equity funds to make the best decisions.
  3. Potential to Land a Board Seat
    When a private equity fund closes a deal, they’ll often look to fill a board seat position with someone experienced in the new acquisition they’ve made. If you have just advised them on the deal, it’s likely you will be top-of-mind when they begin the search to fill a board seat.
  4. Potential to Become an Operating Partner
    Many private equity funds have operating partner roles. These roles are used to drive value and be a catalyst for change in the recently acquired company. When looking to fill an operating partner position, private equity funds will likely first tap their existing network, of which you are a part as soon as you advise them.
  5. Resume Differentiator
    In a competitive job market, experience advising private equity funds is one more item that can help differentiate your resume from others’. It can catch an executive headhunter’s eye and spark interesting discussion when interviewing for a new role.
  6. Additional Income
    As a potentially well-compensated professional, the primary motivation to be an advisor would likely not be the pay. However, with hourly rates in the range of $300-$500, it does not hurt to make some extra income on the side to contribute towards your personal financial goals.

As far as advising goes, there are many companies with whom one can sign up. Some companies charge their advisors to be a member while simultaneously putting the onus on the advisor to market themselves well enough to be contacted.

With InquireOf, there is never any cost to join as an advisor. You set your hourly rate, decide which calls you want to take, and schedule them at your convenience. With the many benefits of being an advisor, it would be a missed opportunity to not make yourself available to private equity investors needing industry expertise.

THE NEED FOR SPEED
July 2, 2019 at 6:00 AM
by Mary Jenkins
On the Way to Work

One of the biggest challenges private equity faces today is competition among one another. There are thousands of private equity firms with billions of dollars to spend and it’s not always the highest price that wins. In today’s competitive market, differentiating your bid can make the difference between winning or losing a deal.

According to a 2017 Deloitte survey, sellers consider speed and conviction of closing a transaction, alongside price, to be key factors when choosing a successful offer.

To improve both, savvy firms put a premium on diligence or pre-diligence to form a strong, initial opinion of the target company, which can ultimately help them win the deal.

These firms know it takes more than the highest bid to win. It also requires a fast pace to edge out competition. That said, moving too quickly comes with risks; specifically, it means less information to examine and less time to review it.

So, how can you move fast to capitalize on an investment opportunity while hedging against risks of the unknown?

By speaking with expert advisors.

There are many benefits to working with an expert advisor. Advisors can give invaluable insight into the industry, market, and specific opportunities and risks associated with a potential deal.

Engaging with advisors as early as possible grants a considerable edge to any investor. The right advisor can make it obvious early on if a deal isn’t worth pursuing, freeing you to start looking at more promising opportunities. Or an advisor can highlight encouraging facts about a deal, of which other potential investors might be unaware.

Quick turn around during deal consideration is vital for a firm’s overall success. With so many opportunities, being quick enough to determine a deal’s potential before investing too much time and money can make all the difference.

The use of expert advisors can greatly increase the speed of the due diligence and pre-diligence processes. Their industry expertise and competitive knowledge can help a fund avoid costly, expensive mistakes up front.

If your fund could benefit from an advisor, try out a risk-free 30 day trial with InquireOf. With a low monthly subscription fee for the whole firm, search for and connect with as many advisors as you would like and build your go-to advisor bench. Make sure that lack of industry insight doesn’t hold your fund back from the next great deal.

SIX BENEFITS OF ADVISOR USE
July 8, 2019 at 6:00 AM
by Valerie Chisum
Me and my film crew were setting up for a basic interview. Before the interviewee sat down for the camera, the interviewer went over some questions with him. They proceeded to bounce ideas off of each other and had an energetic brainstorm.

If you work in the private equity sphere, you’ve likely heard about the benefits of using advisors in the due diligence process. When making the decision whether or not to pursue multi-million dollar deals, there are certainly a lot of boxes to check. But why go through the effort to find an advisor for the deal? Here we’ll cover six benefits of advisor use during the due diligence process.

1. Industry expertise

Perhaps the most obvious benefit of advisor use is an advisor’s industry expertise. While a private equity fund investor may know general information about an industry, only an insider with years of experience will be able to provide the detailed information critical to deciding whether or not to move forward with a deal. An advisor’s years of work within an industry will yield critical insights to inform a potential deal’s value.

2. Competitive knowledge

Who better to provide insight on a company than someone who once worked for a competitor? Valuable advisors will have opinions on a company from a competitive standpoint - what are the target company’s strengths, weaknesses, opportunities, and threats?

3. Uncover blind spots

Working with someone with operational expertise can help your fund uncover any blind spots when evaluating a target company. An advisor with knowledge of what it takes to successfully run a particular type of company will be able to expose any unrealistic optimism in the target company’s CIM.

4. Invest a little up front to avoid costly mistakes

Because of their expertise, industry advisors often command a high hourly rate. However, it’s wise to invest a smaller sum up front in order to avoid a potentially disastrous acquisition. Just as you likely wouldn’t buy a car without doing some research, it makes sense to invest in some time with an expert before committing to purchasing a company in an industry with which you may not be entirely familiar.

5. Acting quickly is key

When considering a deal, speed is key; using an advisor can help you get to yes or no more quickly. According to a 2017 Deloitte survey, sellers consider speed and conviction of closing a transaction, alongside price, to be key factors when choosing a successful offer.

6. Network with potential board advisors

If your fund does go ahead with the acquisition, you’ve already got a head start on finding potential advisors to sit on the board for the new company. Having an advisor bench on hand can be beneficial during the transition period and as the company comes to pivotal moments in its growth.

It’s clear to see there are many benefits to using advisors in the due diligence process -- in today’s competitive landscape, it’s critical to differentiate your firm in the bid process. Their industry expertise and competitive knowledge can help a fund avoid costly, expensive mistakes up front. In addition, advisors are potentially great additions to the board to share their insight during key moments of transition in growth.

If your fund could benefit from an advisor in the due diligence process, try out a risk-free 30 day trial with InquireOf. With a low monthly subscription fee for the whole firm, search for and connect with as many advisors as you would like and build your go-to advisor bench. Make sure that lack of industry insight doesn’t hold your fund back from the next great deal.