Private equity investing is evolving as fund sizes and competition for deals increase.   Successful Private Equity firms are now digging deeper to transform portfolio companies into category leaders.

The private equity landscape is changing. With more money chasing deals, investment managers can no longer rely simply on buying low,  making some modest improvements, adding a couple of bolt-on acquisitions and then on-selling at a handsome profit to unsuspecting public markets.

Evolution of Private Equity Firms

The success of PE managers over recent decades has enabled them to raise ever-larger funds. One consequence of this has been the emergence of a two-tiered PE market with many mid-market PE deals being on-sold to larger  PE funds.

Facing increased competition when buying assets and increased scrutiny from other PE professionals on the buy-side,  mid-market PE professionals now have to dig deeper to add value to their portfolio companies.

Private equity firms have historically focused on buying out owners and bringing in new management. However, increasingly, we see mid-market Private Equity seeking to partner with businesses owners and existing management.  More so than previously they play a hands-on supportive coaching role that focuses on clarity of key value drivers, supported by alignment of incentives of owners, managers and key employees to work toward a common goal.

Platforms for Growth

While acquisitions remains a key strategy for growth PE firms are now focusing more heavily on ensuring that portfolio companies are ‘match fit’. Increasingly we are seeing investments in systems and processes to enable more effective post-acquisition integration by increasing the likelihood of realising synergies.

This new focus by mid-market PE managers on implementing structured business performance frameworks as well as investments in cloud-based digital technologies is designed to focus attention on key value drivers and operational efficiency.
What this means for businesses is that Private Equity is particularly interested in opportunities where they can deploy these approaches and their own capabilities in order to more proactively create value in their investments.

Any questions? Feel free to contact me by email at [email protected]. In the past year, Eaton Square has advised on more than one transaction a month and we see the market getting more intense as succession issues bite (supply-side) and larger firms seek to strengthen their offerings and competitive positioning (demand side) by acquiring businesses that have a clear understanding of both their identity and their market.



Neil Bourne is the Managing Principal for Eaton Square Sydney. Neil has been working with growth stage technology business for over 15 years in venture capital and corporate finance. Neil is married to Sarah, has three children and enjoys Brazilian jujitsu and outdoor sports.

[email protected] 61 1800 332 866