A private equity (PE) deal could be a catalyst for growth and innovation for your business or a strategy that will allow you to exit on your own terms. However, to ensure a successful outcome, it's important to have your financial reporting and internal controls in good shape for due diligence by the PE investor pre-acquisition and for ongoing operations post-acquisition.
With the rise of PE investment in small and mid-market businesses, companies need to be prepared should they be approached. To have a strong foundation for a future transaction, your company needs to start preparing early. This will give you time to both identify problem areas and to address them.
In this article, we highlight the benefits of PE investment and how your financial reporting can influence investment.
Private capital is where the growth is
Private capital is the broader term used for investment in assets not available on public markets. This encompasses PE, venture capital, private debt, and real estate.
The private markets are becoming a much bigger part of the overall Canadian economy. In 2012 private capital investment was only 6% of the economy. By 2021 it rose to 12%.
Additionally, private capital is increasingly investing in small and mid-market companies. In 2021, 26% of investments were in small-medium businesses (SMBs) and mid-market enterprises and that's forecasted to rise to almost half at 42% by 2026.