In this introductory video in a series focusing on Private Equity investment in professional services firms, Managing Partner Clare Murray and Partner Corinne Staves discuss what firms should be thinking about when considering PE investment for their firm, or the impact for them if their competitors accept PE investment.
In this video, Clare and Corinne discuss:
- Initial considerations for engaging with PE firms: The importance of evaluating your firm’s strategic goals and its long-term objectives over the next 5-10 years. Is external investment necessary or desirable to achieve these goals, or to achieve them comfortably within a specific time frame?
- Growth opportunities with PE investment: External investment can drive rapid expansion through acquisitions and lateral hires, providing access to new technologies and economies of scale, offering significant investment for faster growth.
- Management structure post-investment: How will the new investors and/or structure affect decision making and leadership?
- Aligning firm expectations with the PE firm: Are your firm’s (and your partners’) growth strategies truly aligned with those of the potential investors? The importance of clearly communicating growth expectations to avoid misunderstandings.
- Due diligence and preparation for investment: Conducting thorough diligence and the importance of addressing any “skeletons in the closet” early (e.g. legacy costs, underperforming partners, partners with grumbles).
- Cultural and structural implications and addressing concerns: How will transitioning to a PE-backed model change compensation structures for Partners? How can your firm maintain a sense of ownership and engagement amongst its Partners? What strategies can be used to manage Partner expectations effectively, in particular, addressing fears from younger partners that PE investment might undermine the firm’s culture and legacy?
- Strategic decision-making: How can you objectively evaluate PE offers to determine if they align with the goals of the firm?
- International considerations: Navigating the various regulatory environments across jurisdictions while considering the benefits of diversification and risk management.
- The risks of not exploring PE investment: Could ignoring the trend of PE investment hinder your firm’s competitive edge?
If you would like to discuss any aspect of private equity investment in relation to your firm, or if you have any questions arising from this recording, please contact Managing Partner Clare Murray, or Partners Corinne Staves or Zulon Begum.
