How a Freelance Private Equity Consultant can help increase your company´s shareholder value
Private equity firms offer way more than just monetary investments to their portfolio companies. Whether it’s upgrading a portfolio company’s equipment or increasing staff productivity, PE firms can turn underperforming businesses into revenue-generating machines.
But finding the right portfolio companies to invest in and increasing their value is easier said than done. Ultimately, it’s all about making the right decisions - because the wrong ones will cost a lot of money.
This is why having an external expert on board who has experience in private equity is crucial. In this article, we’ll discuss how freelance private equity consultants can help PE firms steer the ship in the right direction.
1. Evaluating Opportunities
Warren Buffett has decades of experience when it comes to investing, and he is right. Investing in a few ‘right’ portfolio companies is better than investing in a lot of unqualified ones. Also, with so many investment opportunities in the market, things might get a little overwhelming sometimes. As a private equity firm, you have hundreds of investment options to choose from. Without proper calculations, foresight, and the right advice, an investment in a portfolio company might end up being completely futile.
This is when private equity consultants come into play. A private equity consultant can help PE firms evaluate various investment opportunities and weed out non-viable options. Although it sounds very straightforward, this process can be very tiring and time-consuming. That’s why it’s worthwhile hiring the helping hands and intelligent brains of consultants who are aware of current market trends, potential risks, and who can analyze the financial situation of portfolio companies.
2. Analyzing the Value and Potential of a Portfolio Company
Out of the few qualified potential portfolio companies that make it to the final stages of consideration, only the cream of the crop will actually be acquired by PE firms. A lot of factors have to be taken into consideration to make sure that the best investment options are not lost. This will require a whole lot of research, data collection, and analysis. An experienced private equity consultant can help a PE firm’s internal team make more informed decisions when it comes to choosing portfolio companies to invest in.
A consultant may consider factors like the portfolio company’s market position, the potential for growth, stability of revenue, industry trends, etc. during the analysis. Certainly, consultants come with a price. But as a private equity firm, having an external perspective on investment decisions will pay for itself in the long run. The best private equity consultants are well-versed with the problems you may face with your investments and acquisitions in the future - probably because they have seen other PE firms make the same mistakes before. That’s why they can not only guide you in the right direction but also prevent you from heading into the wrong one.
3. Helping Portfolio Companies Grow After a Private Equity Firm Has Invested in Them
A private equity consultant can not only help you invest in the right portfolio companies, but they can also support you in increasing their value to ensure that your private equity firm gets a good return on investment. A private equity consultant can collaborate with freelance consultants from other backgrounds and help portfolio companies in the following ways:
Growth:
A lot of top consultants are growth experts and can strategize new ways to scale portfolio companies. For example, if a portfolio company is selling its products only through brick-and-mortar stores, growth experts can help create new channels of distribution, for instance, an e-commerce website, to increase sales.Pricing:
Sometimes, companies leave a lot of money on the table just by setting the wrong price. Consultants can examine the market, competitors, supply & demand, and other factors to set the right price for the portfolio company’s products/services. It’s not as easy as it sounds - it takes a lot of research and brainstorming. So it’s best to let an experienced consultant handle it.Operations:
When a portfolio company is not performing well, it’s not always because its products are bad. Sometimes, problems lie within operational efficiency. Portfolio companies might have flaws in their operational processes. Consultants can help create new processes and prioritize the right tasks. For example, switching to the agile framework and dividing tasks into weekly sprints may help streamline operations.Digitalization:
Businesses that are not digitalized might go out of business at some point. During the first lockdown, some countries enforced cashless payments. When this happened, businesses that already had digital payment methods in place had a relatively easy time as compared to those that were not digitalized and mostly accepting cash. There are several other instances in which digitalization saved the day for many companies. That’s why it’s important to let a consultant guide you with digitalization to ensure that the portfolio company you invest in keeps up with changing times. Final Thoughts
Simply put, a private equity consultant brings an expert, external perspective to a PE firm’s internal decisions. First, they can help private equity firms by recommending them where not to invest. Then, after going through profiles of a range of potential portfolio companies, a consultant can conduct in-depth research and analysis to assist you in choosing investment opportunities that have the highest potential of positive returns. And last but not least, consultants can offer ongoing guidance on a long-term basis once a PE firm has invested in a portfolio company. Whether it’s growth strategy or operations, consultants can help you take portfolio companies to the next level.
So, where can one find highly competent and experienced freelance private equity consultants?
Well, there are several ways to do it, but the easiest and quickest one is to contact an online consulting platform, such as Consultport.
Here at Consultport, we screen all our consultants beforehand and add only the best ones to our talent pool. All consultants on our platform have worked with blue-chip companies and/or big consulting firms. And if you're the type of person who doesn’t like wasting time, you'd be glad to know that 71% of our projects are staffed within 48 hours.
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