Private equity is a form of financing which is gaining more interest from Irish entrepreneurs and business owners. Fewer banks operating in the Irish market post the financial crisis and more disciplined lending by those that remain have led to a marked reduction in bank funding available for companies looking to invest for growth.
It is positive then to see that new non-bank funding options have emerged with alternative lenders, and indigenous private equity firms such as MML, Renatus and BDO in the small cap range, and Carlyle Cardinal Ireland (CCI), in the mid cap range, are all seeking to deploy capital here.
CCI is a joint venture between The Carlyle Group (NASDAQ: CG) and Cardinal Capital Group. The €292 million private equity fund is focused on growth capital and buyout investment opportunities across the island of Ireland. CCI has completed six investments in the last two years in well-known Irish companies such as Lily O’Briens, Carroll Cuisine, Payzone and Abtran and recently signed its seventh investment in AA Ireland.
In looking at a potential investment, CCI looks for a strong and committed management team; good growth potential and ability for CCI to make a difference.
So what can a company expect from their Private Equity investor? Typically Private Equity investors provide capital for growth and access to networks around the world which can facilitate international expansion. They are “active owners” that help to drive value for their investors and the companies they invest in. They sit on company boards and provide strategic direction to management. But it’s important to stress that private equity managers are not operators and company management are empowered to run the business day to day.
When considering Private Equity investment, owner-managers need to ask the following questions.
- Why are you raising capital?
- Is debt or equity the more appropriate option for your business?
- What are your personal ambitions and your ambitions for the business?
- Have you a 5 year business plan?
- Do you have the right management team to execute on the plan?
- Have you an advisor with appropriate expertise to guide you in your negotiations?
It’s also important to pick the right investor. The track record and relevant experience of your potential investor are important but personal chemistry and trust is paramount. This is a partnership where you must have a common vision for the business and can work together for the long term to realise it.
The growth-focused private equity investment offered by the CCI Fund can provide the capital, locally-based financial expertise and global business network to support owners and managers in Irish companies wanting to take their companies to next stage of growth.
Peter Garvey is a Managing Director of The Carlyle Group. He can be contacted at peter.garvey@carlyle.com
The views expressed in the posts and comments of this blog do not necessarily reflect the views of the Institute of Directors in Ireland. They should be understood as the personal opinions of the author. The content of this blog is for information purposes only and the Institute of Directors in Ireland is not responsible for the accuracy of any of the information supplied.