A wave of mergers and acquisitions is moving through the industry, as utilities and financial players position for growth and strategic advantage. Will economic and regulatory forces continue...
Private Equity Still Strong
Volatile markets create investment openings.
bases and sustainable free cash flow. If a start-up company is looking for an investor, venture-capital firms are typically the answer. Additionally, business owners should be able to show that the company has no significant legal or environmental problems.
Private-equity funds often look for companies with strong market positions and an opportunity to increase profitability. Owners typically must be willing to sell a significant majority stake in the business (unlike with venture capital firms, which often will take a minority stake). But owners or the existing management team frequently still are allowed to manage the company during the life of the partnership; private-equity firms typically do not operate businesses on a daily basis. Instead, private-equity firms plan to sell or take companies public within three to seven years after the initial acquisition.
When a business owner in the energy or utility industry is ready to sell to a private-equity firm, the selection of the right equity partner is of utmost importance. Selecting the right private-equity firm allows a business owner to be able to execute a flexible transaction structure, create rewards for senior managers and gain access to new strategic and operational resources to help improve and build the business.