Private Equity Firms Trumped by Family-Run Brands
Private Equity Firms Facing Strong Competition from Family-run Investors
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 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
Private Equity Analyst Investment Executive Private Equity Associate Investment Manager Investment Director / Principal Private Equity VP / Associate Director
This Year's Busiest Private Equity Buyout Dealmaker
The world's largest private equity company, the Blackstone Group LP, has been revealed as the busiest dealmaker in buyouts this year.
The Second Busiest Private Equity Firm
The other top three are Credit Suisse Group AG (located in Zurich), Nordic Capital AB (based in Stockholm) and EQT Partners AB (also located in Stockholm). Of these three, he largest player
In the same period last year, the number of private equity transactions rose by 51pc to $287 billion, according to figures released by Bloomberg.
The Busiest Venture Capitalists
E-commerce and the internet continue to attract the bulk of venture capital, at $32 billion, with companies on this year's list including Twitter Inc, Facebook Inc and 360buy.com
How Do These Private Equity Firms Work?
Firms which work in private equity usually use high-value loans secured against acquisition targets to finance over 50pc of the purchase cost. They use their own funds to finance the rest. These firms will then seek to improve the acquisition's business performance or further expand them, with a view to selling and making a profit within five years. Venture-capital firms will usually invest in start-ups, as they offer better prospects for rapid growth, as well as companies which lack the easy access to primary capital markets that they need to fuel their expansion.Private Equity Analyst Investment Executive Private Equity Associate Investment Manager Investment Director / Principal Private Equity VP / Associate Director
