The Role of Private Equity Investment in Rapid Scaling
Founder-led and family-owned businesses often face challenges when it comes to scaling rapidly. Having successfully navigated the start-up phase, carved out their niche, and established their business and brand over many years they can often uncover unexpected challenges of ongoing growth. Poised to embark on the next stage of expansion, privately owned, founder led businesses may have limited access to capital, resources, and management expertise. Additionally, it could be the founder themselves that becomes a future pinch point – especially if there is a great deal of risk around them stepping back from the day to day. This is where private equity invesment can be a game-changer and can support with succession planning.
De-Risk
For many founders, it is their passion and hard work over the years that has led to the success of their business. But, this does mean that they can become a potential point of failure when they take a step back. With the support of private equity investment , the founder can look to ensure they have a management team with a complementary mix of experience, skills and behaviours to deliver the value creation plan. Additionally, having a succession plan in place will allow for a smooth transition, when the time is right, to an enhanced team that can fill any gaps that the founder may leave as they step away.
Capital Injection
PE firms can provide the necessary capital to fuel expansion plans. They typically have deep pockets, giving them access to capital which might otherwise be unavailable to an owner founder. With the involvement of PE there is an increased focus on the numbers, meaning that for many private equity invested businesses, the appointment of a CFO is crucial. Rowan Client, Clubhouse Golf, appointed a CFO following private equity investment, to deliver stronger commercial excellence and drive the desired accelerated growth.
Operational Expertise
The expertise brought by PE firms goes beyond financial investment. It includes a strategic focus on operational excellence, efficiency enhancement, and supply-chain optimisation to elevate the standards and competitiveness of the invested business. With the support of Rowan, Clubhouse Golf, identified the need for a broader senior leadership team and followed the appointment of their CFO with further appointments including an Operations Director and Marketing Director, both of whome brought the functional experience needed to deliver the required efficiencies.
Strategic Guidance
PE partners tend to specialise in a particular sector or type of value creation journey, and therefore have a deep understanding of the industry and market trends. Following their invesment they can offer strategic guidance to help businesses navigate challenges and seize opportunities. This guidance delivers the support and collaboration that a founder desires and can bring a fresh approach to problem-solving, strategic innovation and responsible growth practices.
Access to Networks
Private equity investors often have extensive networks that can be leveraged for partnerships, collaborations, and market expansion. By tapping into these networks, founder-led businesses can access valuable resources, expertise and opportunities that contribute to growth, innovation, and competitiveness.
Private equity has evolved significantly, debunking the myths that once deterred founder-led and family-owned businesses from seeking external investment. As these businesses embark on ambitious growth plans and navigate turbulent times, private equity is a trusted ally, providing the necessary capital, operational expertise, and strategic guidance.
If you would like to understand how Rowan can support your business in identifying the right leadership team to ready your business for private equity investment, get in touch with Gina Raymond.
