FabExchange Blog

Why A Private Equity Acquisition Can Be The Most Efficient Way

In a general sense, private equity firms invest in companies that are not listed on the stock exchange, influence management and employ their own highly qualified managers to make effective changes there. Their goal is to increase the value of the company through operational improvements or faster growth and to sell them again, sometimes after a few years or much sooner. To sum up the definition of private equity would be that external investors bring equity into a company, but at the same time also bring their own know-how, for example, in sales or management. 

Private equity can be used in the most varied of phases of a company: During the seeding and startup phase private equity can be used for financing, through management – or leveraged buyouts, or through a turnaround phase, when a company is in crisis and private equity funds can flow in to get it back on track. Some companies also specialize in investments in the liquidation phase.

We have identified a few important reasons why private equity can be the most efficient way, especially when considering a successful exit strategy.

  1. Positive influence on corporate strategy:

One of the biggest advantages that speaks for a private equity acquisition is the knowledge transfer, extensive management experience and the contacts that are gained through the support of investors. 

  1. Improved negotiating position for credit negotiations with banks:

In challenging restructuring, trust and insolvency cases, the knowledge of private equity firms in the areas of corporate finance and corporate restructuring creates sustainable added value.

  1.  Comprehensive network:

An extensive international network, as well as within the industry, open up diverse business contacts that come with a wealth of ideas.

  1. Contribution to the recovery of companies and the preservation of jobs:

There is also an important economic reason in favor of private equity in some instances. 

Private equity firms can enable a company to leverage the full potential that was previously unused. As a result, numerous jobs can be retained and new ones created. 

When it comes to a possible exit-, divestiture-, or acquisition – strategy as a business owner, you may ask yourself whether you should talk to private equity companies as a potential buyer group in addition to strategists. If economic or financial reasons lead to sales decisions or create a need for restructuring, a high degree of caution, consistency and speed is required in the planning and implementation of such complex transactions. 

FabExchange can offer specific knowledge in the Semiconductor and EMS industry, as well as many years of experience providing companies, institutional creditors, investors, trustees and insolvency administrators with the best possible support. We solve some of the industry’s most complex challenges involving commercial real estate, infrastructure, intellectual property, and capital asset transactions, as well as valuing and purchasing advanced technology manufacturing companies. Our biggest strength is our ever growing global network of investment partners we work with. 

Contact us today at anna.effa@fabexchange.com if you would like to learn more about our services and how we can support your business.

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