As part of our goal to provide portfolio management teams with top industry insight we are preparing our next research paper on secondary buyouts. In July, we started surveying CEOs who are preparing to exit via SBO and asked them about their concerns at this stage and any actions that they are taking or planning to take in order to overcome them. Respondents are all in or past their third-year post private equity transaction and are considering their exit.
The results will be collated and analysed along with anecdotal data from our network of private equity backed expert CEOs, chairmen and investors and published in a research report in the near future.
In the meantime, here are a few interesting trends that we’ve seen form in our data collection so far.
- 50% of respondents claimed that the vote for Brexit will have an effect on their exit route while also affect the timescales to exit. Out of which the majority believe their exit could be delayed up to 1-3 years.
- Approximately 75% of respondents are considering a secondary as their preferred exit route. Out of which, 75% intend to maintain their role as CEO post-SBO. The most significant factors swaying their decision include cash out and the deliverability of the plan.
- The relationship/chemistry with the new investor and availability of funds for follow-on acquisitions were two of the most significant deciding factors when selecting a new investor.
- Areas where respondents felt they needed support with pre-deal included Operations, HR and Finance.
- 80% of our respondents have planned for succession and half of them see their successor coming from within the company whereas the rest are seeking externally.
- 50% felt that the high pricing in today’s market affected their dual role as seller/buyer and somewhat influenced their view on rollover. 50% expect to rollover between 30-50%, 25% expect to rollover between 50-80%, the rest were unsure.
- 80% foresee changes in the management team, out of which all consider it of high importance to communicate this to their new investors at an early stage.
As data is still being collected this information should be taken as an early indication of some of the concerns surrounding an SBO and not the final findings of our research.
The complete report will be published in the near future.
If you are a CEO/MD of a private equity backed business who is considering an exit and would like to take part in our research please fill in our survey here.
If you have already been through a secondary buyout please fill in our post-SBO survey here.
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