Mark Hauser lists the 8 factors private equity firms look for when acquiring a business
Mark Hauser details how private equity transactions work in an article from CEOWorld Magazine. According to him, private equity firms look to take total control over a company compared to stock market investors who buy a collection of shares and stocks. Private equity firms look to make a return on each investment. In regards to the bidding process, Mark Hauser details this is where firms will complete their due diligence. The three types of diligence are commercial due diligence, financial due diligence, and legal due diligence. Commercial relates to the company’s trends and position. Financial looks for financial information and legal is examining possible liability issues. After examining all these matters, a deal is sent to an investment committee and negotiations are conducted. The business is then added to the portfolio and network. The successful transaction comes with an exit, typically during a 3-7 year gap after the first investment is made. Most private equity firms exit because of acquisition from another company.
Lastly, Mark Hauser of Hauser Private Equity lists eight different factors that come into account when looking to acquire a business. The first is looking at trends and how a business is innovative. Next is a business that can adapt and has been a strong competitor in its industry. Another is a firm that has sustained growth with multiple income streams. They also strive to find businesses that should need only one investment round so they can allocate income to other areas of interest. One big important factor is having a business plan put together with short-term and long-term projections. Private equity firms look to invest in others that have a strong management team. Next, they look for an effective R&D plan and a backup plan in case they need to exit. Mark Hauser describes private equity firms have the tools to make the necessary adjustments.
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