Working with management teams of investor backed businesses

There are many reasons why investor backed businesses look for support as they progress through their investment cycle. Many businesses securing PE backing for the first time oftentimes lack what they need: For example, they do not have the internal infrastructure and communications structures in place to support sustainable long-term growth on day one. For others, they have long received PE backing and are seeking new areas for growth.

GK working with Management teams

Over the past 10 years, GK has supported PE-backed businesses in need of political risk and strategic communications support. Most of our work in this field involves working directly at c-suite level, providing robust policy and political risk analysis and communications counsel to support their business decision making processes. Our expertise in this area allows us to identify some of the main reasons why management teams seek outside support:

1. Providing market analysis.

Soon after the acquisition, many management teams find themselves with financial backing from their new PE partners. However, this is specifically to make investments in new businesses, known as “bolt-on acquisitions”. In many instances, these acquisitions are in new areas which offer the business opportunities to expand their service offering. In these instances, management teams require detailed policy and political risk analysis to identify risks and opportunities associated with the new policy areas in which the target company operates. The results of this analysis can oftentimes be the deciding factor in whether an acquisition is made or not.

2. Identifying areas for organic growth.

In addition to identifying potential bolt-on acquisitions, many management teams look for areas where there are organic growth opportunities. Central, regional and local government are widely regarded as valuable, but hard-won, customers where long-term contracts are won. Waste management, social care, facilities management and defence. These are just some of the areas where the government has historically sought third-party partners to carry out responsibilities. Therefore, whether you are looking to work with the government for the first time, exploring moving from being a local to central government supplier or vice versa, identifying where there are market opportunities is key to success.

3. Understanding and addressing policy risk.

The government is well known for making policy decisions which can sometimes have unintended consequences for businesses. At other times it intentionally makes decisions which have negative impacts on a business, as many estate agents recently discovered following the banning of letting fees. Understanding current and potential future government policy and the impact this could have on growth are essential for any company with or seeking investment. By understanding potential risk, these risks are managed and mitigated over the course of an ownership cycle.

GK has provided political due diligence for over £10bn worth of transactions. And typically half of our client base are PE-backed businesses. For further information, please contact Emma Petela on emma@gkstratey.com

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