Different PE strategies?

What are some of the key strategies different funds utilize across acquisitions? I was reading through Bain's PE reports and in the '18 one, they described "buy-and-build" pretty extensively. So I was curious what is the nomenclature that PE veterans would describe other major strategies and examples of deals in each

Guessing "value" investing is one -i.e., identifying an undervalued target from non-systematic factors. Would love to hear what everyone else thinks or point me to any resources that talk about this in-depth

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Comments (18)

Most Helpful
Jun 28, 2020 - 7:16am

I haven't seen this anywhere systematically laid out. Here is what comes to mind:

  1. Buy and build
  2. Roll-out
  3. Corporate carve-out
  4. Public-to-private
  5. MBO
  6. MBI
  7. PIPE
  8. Special situations / distressed
  9. Asset sale
  10. Build-a-platform (satellite deals, shipping deals)
  11. Growth equity
  12. Corporate breakup (buy a conglomerate, break it up)
  13. Corporate JV / co-investment (e.g. CVC partnered up with Kone earlier this year in a failed attempt to acquire Thyssenkrupp Elevators)

Can't think of anything else but I am sure the WSO community will be quick to step in and come up with a few more.

Good luck,

Tamara

  • 20
Jun 28, 2020 - 3:06pm

Pleasure.

Roll-out: you take a successful concept and replicate it in other locations. Invest capex, get returns on new locations. Example: PF Changs, Chopt, Golden Goose, Moncler.

Build-a-platform: sometimes it is cheap to buy a hard cash-producing asset and then accumulate a whole portfolio of them, similar to real estate. For example, there were some PE-backed shipping companies (you literally buy vessels). Or expand satellite operations (google Inmarsat). You get paid so called "platform premium" at exit because you have created a large and well-diversified business.

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Jun 29, 2020 - 2:52am

Oh yes! Glad you mentioned it - TPG's permanent capital platform, Pace Holdings, comes to mind.

Jun 28, 2020 - 5:20pm

Buy the book "Mastering Private Equity". It has a good overview of the main strategies employed by firms iirc.

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