Quick Search

Private Equity Firms Trumped by Family-Run Brands

Private Equity Firms Facing Strong Competition from Family-run Investors

The consumer deals market is experiencing a strong shake-up from family-run and owned investment businesses, which are increasingly squeezing out private equity (PE) firms and forcing them to re-evaluate their business strategies.

Family-run Private Equity Firms Long-term Game Plan

These families have notoriously deep pockets and are well-known for seeking to secure their assets for future generations. This desire shows itself in a long-term game plan, including a willingness to wait for good returns, which naturally puts them ahead of the 'fast buck' mentality of PE businesses.


German Family Investors Creating an Empire in the Hot Drinks Sector

For example, Joh A Benckiser (JAB), the investment organisation of the billionaire German family Reimann, bid for the Douwe Egberts brand in recent months. By doing so it will create an empire in the hot drinks sector that will genuinely challenge the current market leaders of Mondolez International and Nestle, even if the strategy takes some years to fully play out.


Family Funded Business Investments are Likely to Continue Growing

The expectation is that family-funded business investments are likely to continue growing, particularly in the consumer sector. Already this year, nine of the 51 new billionaires in Europe have made their fortunes through judicious investments in the consumer industry, according to Forbes.

The Beverage and Food Industries Continue to be very Attractive Investments

Allowing for real gains from competitive activity, particularly for big-hitting investors with sector specific experience. JAB has already hired a number of industry veterans to manage its investment, including former CFOs and CEOs of Mars.


Other Family Owned Private Equity Firms have the Ability to do Similar Deals 

Most notably, Maxingvest, who are the investment arm of the Herz family. This family owns the massive Tchibo retail business. Equally, a family-owned investment business in Belgium has just invested heavily in a range of consumer businesses, including Remy Cointreau.


Further Options are Available to Family Private Equity Firms who Choose to Co-invest 

Such as 3G, the Brazilian PE firm, which linked up with Berkshire Hathaway to buy Heinz earlier this year for a cool $23.2 billion. The PE ratio for the deal was calculated at 14.6, which is higher than most traditional PE firms will accept.


Family Private Equity Firms Benefiting from Long-term View

Representatives for these powerful families point to the benefit of having a long-term view and the necessary assets and tools to make these investment deals work. Many have a time frame of between 15 and 20 years for their investments to work.


Previous Dominant PE Firms Feeling the Pressure

As result, the previous dominant forces of PE firms are being left in a weak position and desperately attempting to hold ground. They will need to re-evaluate to maintain their viability in an increasingly competitive market.


Written by Ross Stokes of Circle Square - Financial Recruitment

If you're not sure which Private Equity career move would best suit your skills and experience take a look at our Job Profiles. The profiles provide advice on the qualifications, skills and experience required
for each career option. The job profiles also outline salary expectation, job responsibilities and career progression.

Private Equity Analyst    Investment Executive    Private Equity Associate    Investment Manager    Investment Director / Principal    Private Equity VP / Associate Director

If you are looking for advice we have a dedicated career advice section. Our advice is not just generic recruitment advice we have tailored advice for each of the recruitment divisions we work in including: 
To contact one of our specialist financial recruitment consultants call 0207 492 0700 or email: jobs@circlesquare.co.uk Connect with us on Google+ & Facebook

We use cookies to provide you with the best possible browsing experience on our website. You can find out more below.
Cookies are small text files that can be used by websites to make a user's experience more efficient. The law states that we can store cookies on your device if they are strictly necessary for the operation of this site. For all other types of cookies we need your permission. This site uses different types of cookies. Some cookies are placed by third party services that appear on our pages.
Necessary cookies help make a website usable by enabling basic functions like page navigation and access to secure areas of the website. The website cannot function properly without these cookies.
ResolutionUsed to ensure the correct version of the site is displayed to your device.
SessionUsed to track your user session on our website.
Statistic cookies help website owners to understand how visitors interact with websites by collecting and reporting information anonymously.
Google AnalyticsGoogle Analytics is an analytics tool to measure website, app, digital and offline data to gain user insights.

More Details