Preparing for Private Equity Yasser El-Ansary, Chief Executive AVCAL

Preparing for Private Equity

Yasser El-Ansary Chief Executive AVCAL August 2015

The partnership with PE

• Family businesses which reach an ‘inflection point’ or a major event

• Diversification strategy for family

• It’s not just about capital

• Injection of experience and networks

• Catalyst for stronger governance, accountability and controls

• Succession planning strategy

The partnership with PE

• Performance improvement

• Balance sheet optimisation

• It is a ‘hands-on’ relationship – not passive

• Sharing of responsibility and control

• Alignment of culture and ‘fit’ and is important

• Medium-term holding period – exit strategy clear at start

Case study – Aesop

• Founded by Dennis Paphitis almost 30 years ago

• Business funded entirely through sales to start with

• Bank support came later, but was difficult

• Growth strategy came with a 40% PE investment by Harbert Management Corporation

Case study – Aesop • PE ensured that a Board was put in place

• PE allowed the business to make decisions dynamically

• PE enabled ‘scaling-up’ quickly in simultaneous markets

• ‘Was like a gentle push from behind’

• Provided support and confidence to be more aggressive

• Changed the dynamic for third party negotiations

Case study – Shoes of Prey

• Online shoe design business – Founded by Jodie and Michael Fox in late 2009

• Achieved stunning growth in short space of time

• Identified quickly that online marketing was a challenging landscape

• Founders wanted connections, and people with experience

Case study – Shoes of Prey • Watch the video interview

with Jodie Fox, Co-Founder Shoes of Prey

• https://vimeo.com/104465226

Getting ready for a PE discussion • Identify where your business is at – from an objective

perspective

• Understand your market – inside out

• Articulate what role you want / do not want PE to play

• Do your due diligence about the PE firm

• Ensure your financial position is updated

• Talk to current or previous PE-backed businesses

Contact AVCAL

Australian Private Equity & Venture Capital Association Limited Level 10, 27-31 Macquarie Place SYDNEY NSW 2000

T: +61 2 8243 7000

E: ceo@avcal.com.au