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Private Equity Playbook: For Executives Seeking to Land a PE Role or Create Their Own Deal

Written By: Gerald O’Dwyer III 

The PE Guru — Blackmore Partners, Inc | July 14, 2024

This playbook is designed for executives who aspire to land a role in private equity (PE) or, even better, create their own deal. Drawing from various insights and strategies, this guide will provide a comprehensive roadmap for entering the PE field, emphasizing the importance of networking, strategic positioning, and leveraging resources effectively.

1. Understanding Private Equity: A Primer

What is Private Equity?

Private Equity involves investment in private companies through direct investments or buyouts, typically aiming for high returns. PE firms invest in various industries, focusing on enhancing the value of their portfolio companies.

Why Private Equity?

  • Equity Ownership: PE offers the opportunity for significant equity ownership, translating to substantial financial gains at the time of exit.
  • Professional Growth: Involvement in strategic decision-making and operational improvements.
  • Networking: Access to a vast network of industry professionals and experts.

2. Preparing for a PE Role

2.1. Building the Right Skill Set

  • Financial Acumen: Understanding of financial statements, valuations, and financial modeling.
  • Strategic Thinking: Ability to analyze market trends and develop long-term strategies.
  • Operational Expertise: Experience in improving company operations and driving growth.

2.2. Networking and Relationship Building

  • Conferences and Workshops: Attend events like BlackmoreConnects and ACG conferences to meet PE professionals.
  • Online Platforms: Utilize resources like PitchBook, CYNDX, and D&B databases for networking.
  • Professional Organizations: Join industry groups and associations to expand your network.

2.3. Positioning Yourself as a PE Candidate

  • Resume and LinkedIn Profile: Highlight relevant experience, key achievements, and industry expertise.
  • Personal Branding: Establish yourself as a thought leader through blogs, articles, and speaking engagements.
  • Case Studies: Develop case studies showcasing your ability to drive value in companies.

3. Landing a PE Role

3.1. Identifying Target PE Firms

  • Research: Use PitchBook, CYNDX, and other databases to find firms that align with your background and interests.
  • Sector Focus: Look for firms investing in sectors where you have experience and a proven track record.

3.2. Strategic Outreach

  • Customized Outreach: Tailor your outreach to each firm, emphasizing how your skills and experience align with their investment strategy.
  • Email Templates: Create professional and personalized email templates for contacting PE firms and professionals.
  • Follow-Up: Consistent and polite follow-up to keep the conversation going.

3.3. Interview Preparation

  • Industry Knowledge: Stay updated on market trends and recent deals.
  • Mock Interviews: Practice with peers or mentors to refine your pitch and responses.
  • Value Proposition: Clearly articulate how you can add value to the firm and their portfolio companies.

4. Creating Your Own Deal

4.1. Identifying Opportunities

  • Market Research: Conduct thorough market research to identify potential acquisition targets.
  • Industry Expertise: Leverage your industry knowledge to find undervalued companies with growth potential.

4.2. Developing a Deal Thesis

  • Investment Thesis: Formulate a clear investment thesis, outlining the rationale for the acquisition and the growth strategy.
  • Due Diligence: Conduct comprehensive due diligence to assess the financial health and operational performance of the target company.

4.3. Structuring the Deal

  • Financing: Explore various financing options, including debt, equity, and mezzanine financing.
  • Negotiation: Negotiate terms that align with your investment thesis and ensure a favorable deal structure.

4.4. Post-Acquisition Strategy

  • Operational Improvements: Develop and implement strategies to enhance operational efficiency and drive growth.
  • Performance Metrics: Establish key performance indicators (KPIs) to monitor progress and ensure alignment with the investment thesis.
  • Exit Strategy: Plan for the exit from the outset, identifying potential buyers and timing for maximum return.

5. Leveraging Resources

5.1. BlackmoreConnects

  • Workshops and Conferences: Participate in pre-conference and post-conference workshops to gain insights and network with PE professionals.
  • Networking: Use BlackmoreConnects to build relationships with over 200 PE firms and industry experts.

5.2. Online Tools

  • PitchBook: Utilize PitchBook for in-depth research on PE firms and potential acquisition targets.
  • CYNDX: Leverage CYNDX for strategic positioning and targeted outreach to potential partners and investors.
  • D&B Databases: Access detailed company information and financials to support your deal-making process.

6. Case Studies and Real-Life Examples

Case Study 1: Landing a PE Role

  • Background: An executive with 15 years of experience in the consumer goods industry sought to transition into PE.
  • Strategy: Leveraged industry expertise, attended BlackmoreConnects workshops, and used PitchBook for targeted outreach.
  • Outcome: Secured a VP role at a mid-sized PE firm focusing on consumer goods.

Case Study 2: Creating Your Own Deal

  • Background: A former CEO of a $50M revenue manufacturing company identified a potential acquisition target in the fragmented market.
  • Strategy: Conducted thorough market research, developed a strong investment thesis, and secured financing through a mix of debt and equity.
  • Outcome: Successfully acquired the target company, implemented operational improvements, and achieved a 3x return on investment within five years.

Conclusion

Entering the private equity field or creating your own deal requires a combination of strategic planning, networking, and leveraging the right resources. By following this playbook, executives can position themselves effectively for PE roles or take the leap to create their own successful deals. With persistence, preparation, and the right connections, the opportunities in private equity are limitless.

Appendices

A. Email Templates for Outreach

B. List of Recommended Conferences and Workshops

C. Resources for Market Research and Due Diligence

D. Key Performance Indicators (KPIs) for PE Success