Post acquisition - Competing with private equity?
December 22, 2024
by a searcher in Denver, Colorado, USA
I see searchers competing against PE on the buy side in home services (for example), but I'm curious if anyone has experienced significant competition when private equity rolls up in the industry you're already operating in. Is the presence of PE to be considered a negative when selecting an industry to acquire in? Or can you rest easy with the advantages of being a small (sub $5m-$10 player). Curious to hear from experience!
Cheers!
from University of Wisconsin in Los Angeles, CA, USA
PE and other large players make markets more competitive but they also provide evidence that there is a good opportunity in that industry.
I would think about competitition more generally in the markets you want to operate. How penetrated is the end-market and is it growing? How hard is it to find and win over customers? How important is price to customers compared to other factors? Typically a market is good if it is fragmented, growing with moderate or less penetration, it is not very difficult to win customers, and price is usually not a primary consideration.
Another important thing to consider is your strategy and game plan in the market. Do you have a compelling strategy to grow the business and build value? Do you the skills, team and capital to execute on that game plan?
from Vanderbilt University in San Antonio, TX, USA
In terms of competition - there are more folks reaching out to the same potential customers which wears them out, but our most frequent sales opportunity is a prospect whose current provider was bought by a PE firm and either service experience fell off a cliff or their contract was aggressively repriced from what they were paying historically. Bit counterintuitive but it creates some opportunity.