How SLK Catalyst Partners Helps Private Equity Sponsors
Overview
Information Asymmetry
The Private Equity investment thesis is rooted in asymmetrical information and relationship.
Rearview Diligence
The Due Diligence process is largely run in ‘rear view’ mirror to maximize value at transaction close versus hold period.
Strategy Divergence
Value Accretion Plans deliver suboptimal execution outcomes because of divergence between in-flight strategy and investment thesis.
In Private Equity acquisitions, limited pre-acquisition access to company data and personnel often renders even the most carefully crafted investment theses a theoretical exercise. Post-LOI, the fast-paced due diligence process forces PE teams to focus on immediate value maximization, sidelining strategic alignment and leading to suboptimal value creation plans.
Compounding this challenge are volatile market dynamics, such as rising interest rates and fluctuating deal activity, which pressure traditional value levers and force constant strategy recalibration. This reactive approach undermines the PE firm’s ability to balance short-term pressures with long-term objectives, jeopardizing anticipated returns and overall value creation.
Developing a Value Accretion Plan
Private Equity's Challenges
Limited Insight During Initial Phases
In small to mid-size Private Equity (PE) transactions, firms often start with competitive bidding processes that rely on limited company data, leading to speculative strategies during the Indication of Interest (IOI) and Letter of Intent (LOI) stages.
High-Pressure Due Diligence
Once exclusivity is granted, due diligence becomes fast-paced, focusing on validating valuations and finalizing transaction structures, which may result in alignment issues between the existing company strategy and the new PE ownership’s goals.
Short-Term Focus Over Strategic Vision
The urgency of these phases often results in value creation plans that prioritize immediate, tactical adjustments over long-term strategic initiatives, potentially creating obstacles for sustained growth.
How we can help
Transforming Investment Theses into Action
By participating early—even in a pre-LOI process—SLK Catalyst Partners can work to turn speculative investment theses into actionable, strategic plans that align with the company’s unique context.
Strategic Alignment and Accountability
Our approach ensures strategic alignment between the company’s demand and supply sides, with clear growth and profit trajectories to mitigate risks and enhance attractiveness for future exits.
Accelerating Your Value Accretion Plan
Private Equity's Challenges
Stagnating Growth During Hold Periods
PE firms often face stagnation in portfolio companies due to market saturation, operational inefficiencies, and competitive pressures, threatening value accretion targets.
External Economic Pressures
Rising interest rates and reduced deal activity create additional challenges, increasing capital costs and limiting growth opportunities through strategic acquisitions or divestitures.
Balancing Immediate and Long-Term Goals
The need to address immediate market challenges while staying true to the long-term investment thesis creates a precarious balance, with the risk of falling short on value accretion targets.
How we can help
Proactive, Forward-Looking Strategies
We provide frameworks that go beyond reactive adjustments, offering strategic, long-term solutions to help PE firms and their portfolio companies thrive despite market volatility. Our expertise spans innovation, efficiency, and technology integration, ensuring value accretion plans are robust and aligned with both market demands and internal capabilities.
Pre-Developed Strategic Plans for Future Buyers
A well-defined strategy from SLK Catalyst Partners can make portfolio companies more attractive to future buyers by reducing the need for strategic rework, thus simplifying the sale process and enhancing value accretion.
A Roadmap to Project Future Potential Value
Private Equity's Challenges
Unrealistic Outsourced Exit Projections
Sponsors typically outsource the marketing effort to investment bankers, who focus on boilerplate marketing material with minimal input from the management team on current business.
Adversarial Environment through the Sale Process
In the absence of a strategic roadmap, future business projections are perceived as conforming to hockey-stick growth patterns, which makes potential buyer groups question the management team’s credibility.
Potential Buyer Groups Negotiate Down
The absence of a strategic roadmap reduces the probability of multiple prospects bidding for the business. The buyer group has an upper hand, and the seller group almost always gets negotiated down or has to provide concessions.
How we can help
Refreshing the Strategic Roadmap for the Future
By partnering with the management team in preparing the sale process, SLK Catalyst Partners can help craft ready-for-action strategic plans that differentiate the company in a crowded seller’s market.
Coaching the Management Team
Our approach increases the likelihood of attracting higher bids and also ensures that the management team is fully engaged throughout the sale process.
How We Work
1
We work with the company management to understand the story line for the hold cycle.
2
We then work with the company management to craft growth scenarios drawing from a rich portfolio of intellectually rigorous and road-tested frameworks to develop strategic roadmaps pertaining to some combination of innovation and growth strategy, efficiency enhancement, technology strategy, market-based strategy, and overall business strategy.
3
This will culminate in two deliverables:
(i) A tangible strategy roadmap, comprising a set of coordinated and clearly defined initiatives on the cost and demand sides, with recommended execution plans and timelines
(ii) A communication package that enhances company management’s ability to credibly present to potential buyer groups.