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

Comments (18)

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Jun 28, 2020

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

Jun 28, 2020

This is fantastic! Thanks for taking the time and sharing. Can you explain what a "roll-out" is? I wasn't able to google around and find the definition. Also what is a satellite/shipping deal?

Jun 28, 2020

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.

Jun 28, 2020

Jesus, what does PE not touch these days

    • 1
Jun 29, 2020

SPACs (Special Purpose Acquisition Co) are getting popular as well

Jun 29, 2020

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

Jun 28, 2020

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

Jun 30, 2020

Thanks for the suggestion! Found a free PDF online and went through it last couple of days. Great read.

Jul 1, 2020
BullishMan:

Thanks for the suggestion! Found a free PDF online and went through it last couple of days. Great read.

EDIT: http://library.sadjad.ac.ir/opac//temp/18979.pdf

    • 1
Jun 30, 2020

Off-question but is there a Corporate Development Report that a well-known company provides for free, similar to Bain's PE report?

Jul 3, 2020
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