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Often a PE Firm will look at add-on acquisitions to a portfolio company as a key component of its growth strategy. This could include add-ons to consolidate across horizontal space (similar companies) or vertically (up and down the value-chain). If a portfolio company's management is meeting or exceeding the PE firm's expectations, then the GP is more likely to agree to fund further growth through acquisitions.
Working with management Most PE Firms will carefully examine management's track record before making an investment. Some PE Firms prefer to place their own management into key positions including the CFO and CEO. Others prefer to invest with existing management. Regardless, most will want management to have an equity position to ensure alignment of interests. Normally, PE Firms will place some of their key staff on the portfolio company's board and will provide a supportive and governance role in the organization. Day-to-day operations remain with management within well defined boundaries and board approved policies. Next... What to look for in a PE Firm |