- Investment Skill, defined by a sponsor’s ability to effectively diligence platforms and add-ons with a clear picture of asset quality and knowing when to sell, is one of PE-CXO’s Nine Dimensions of Governance Fit® that enables executive success.
- Strong sponsor investment skill incorporates value-add deal support and a willingness to leverage executive expertise when pursuing acquisitions
- Collaborative decision-making and strategic diligence from both sponsors and executives are essential for acquisitions that will generate maximum returns
A sponsor’s skill in strategically investing and deploying capital is understandably important to executives. While executives must possess their own set of M&A-focused skills in deal origination, due diligence, and post-acquisition integration to unlock maximum synergies, sponsors inevitably play a major role in guiding the acquisition process. In fact, 83% of executives reported they would not return to work for a sponsor who failed to demonstrate proficiency in conducting diligence for platforms, and lacked a clear vision for acquisition strategy and exit timing.
Read on to discover:
- Defining what creates strong sponsor-executive partnerships that bolster investment success
- Common sponsors pitfalls that can derail investment strategies
- How executives can collaborate better with sponsors to facilitate improved M&A processes
Investment Excellence: What To Look For In a Sponsor
Value-add deal support is a hallmark of a sponsor with strong investment skill. Excellent sponsors bridge gaps within the management team and provide support that individual portfolio companies often lack the full functionality to accomplish as efficiently. For instance, sponsors can assist in managing an M&A pipeline and support due diligence efforts while the management team focuses on maintaining business operations throughout an acquisition process.
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