Private Equity Myth #3: Private equity investors don't add value because they haven't been in an operating role.

Most entrepreneurs have ample experience with operating issues. In fact, that's one of the main reasons private equity investors should not try to micromanage portfolio companies.
However, they can add value by challenging management to think outside the box.
Investors who have backed many different companies at rapid growth stages can recognize patterns that may not be obvious to the management team. They may have a network of relationships that can also assist companies in recruiting talent at the board and management level. They can often help companies explore strategic partnerships with other firms.
Jacoline B. Loewen is a managing director at Loewen & Partners, a private equity and venture capital firm based in Toronto, Ontario. Loewen & Partners works with the owners of growing, privately held companies to access capital. Jacoline can be reached at 416 961 0862 or Jacoline at loewenpartners.com.

2 comments:

Michael @ nCompass said...

Exactly - recognizing patterns, bringing the 'been there done that' to the equation, being able to share what has worked, what hasn't, bringing to light issues, obstacle and roadblocks. The right PE partner can add tremendous value. Perhaps the biggest advantage is how timelines can be shortened by having access to more information, more experience and more contacts.

Michael @ nCompass

J. B. Loewen said...

So true - and bringing some pressure to achiev deadlines too.