While we don’t have a magic fairy wand to drive growth in a business, private equity firms do have an arsenal of tactics that they deploy to help entrepreneurs grow a business. This post highlights five tactics private equity firms use to generate growth.
1. Evaluate Your Business With a Fresh Set of Eyes
A second opinion on your operational results and strategic plan can help you make better business decisions. However, it’s hard to take a step back and evaluate your business without bias. Private equity firms are experts at this, and during diligence, they will analyze every aspect of your company. This process uncovers strengths and weaknesses and serves as the basis for an action plan for business growth and improvement.
2. Strategically Plan for Business Growth
Private equity firms help you understand the different ways to grow your business and prioritize the opportunities. These strategies include organic growth initiatives, planning for future market expansion and pursuing merger and acquisition strategies. Private equity firms have pursued these initiatives in other companies and know how to help you implement best practices for business growth.
3. Identify the Right Talent
If you’re looking to round out your team, a private equity firm can help you identify the right candidates whose skill sets and background align with your needs. It’s very likely that the private equity firm has not only hired for this position in the past but has a network of qualified candidates that could be a good fit for your organization.
4. Open Doors
Private equity firms have vast networks that can help companies get a seat at the table during sales processes. While this isn’t a replacement for a repeatable sales process, it can help accelerate sales cycles and get you access to deals you wouldn’t otherwise see.
5. Improve Access to Capital
The last and obvious way a private equity firm can help a business grow is by providing capital to accelerate growth initiatives. This can be equity from the private equity firm or debt. Private equity firms often have strong relationships with lenders that can give you access to sources of debt that might otherwise be unavailable to you at the same terms.