Bharat Bhise – How Do Private Equity Firms Create Value In The Market
Private equity has gathered popularity in recent years. It is not a novel concept. It existed in the 1940s; however, its popularity soared in the ’80s to the ’90s. The industry witnessed a boom, primarily because of the availability of private and public credit and debts with good yields. The goal of private equity investment is to help the business expand in the market.
Bharat Bhise – the importance of creating value for the business
Bharat Bhise is the owner of Bravia Capital, an esteemed name in the financial and investment market. He says that if you want to become a private equity investor, you must have sound skills, experience, and proven track records as a successful businessman. The critical function of a private equity investor is to create value for the business. He says private equity firms perform two essential tasks-
- The execution of the transaction or the origination of the deal
- Overseeing the portfolio.
The origination of the deal covers the creation, maintenance, and development of business relationships. They involve investment banks, mergers and acquisitions, intermediaries, and other transactions, like where professionals secure high quality and quantity deal flow. This refers to the prospective acquisition businesses referred to professionals engaged in private equity for a review of the investment.
Some companies hire staff internally to identify and connect with owners of businesses for the generation of leads. In the case of mergers and acquisitions, owners of companies focus on proprietary deals that ensure funds are raised. They hold the added responsibility to ensure these funds are effectively deployed and adequately invested.
With efforts for internal sourcing, costs and middleman fees are reduced. An auction is held when professionals of financial services represent a seller. This reduces the chances of the buyer to acquire a specific company effectively. Professionals engaged with the deal origination attempt to create a good rapport with those associated with the transaction to introduce the deal in its early stages.Note some investment banks might compete with private equity firms to buy good businesses. This is a point that you need to keep in mind when seeking private equity for your company.
Execution of the transaction
The execution of the transaction involves management assessment, forecasts, historical financial, and conducting the analyses of valuation. When the investment committee pursues a candidate for target acquisition, professionals of the deal submits its offer. If both the buyer and seller agree, they move forward. Professionals engaged with the deal with several advisors like accountants, lawyers, bankers, and more to execute the phase that involved due diligence.
As per Bharat Bhise due diligence refers to the validation of the operational and financial figures that have been stated by the management. This segment of the process is essential and critical so ensure you do your best. It is here that consultants can identify loopholes in the deal like risks and liabilities that have not been disclosed openly.