Private Equity Consultant: What Do They Do, How Do They Help Your Business?

If you’re a business looking to grow more sustainably, you may find yourself heading down the path of private equity to diversify your offerings, reach new customers and receive expert insight about how to maximize your potential.

But before you experience the benefits, it’s vital to understand how and where a private equity consultant can step in to make your growth process even smoother.

Everything you need to know about private equity consultants:

• What is Private Equity?
• What does a Private Equity consultant do?
• When should you hire a Private Equity consultant?
• How can a Private Equity consultant help your business?
• Types of projects Private Equity consultants work on, plus examples

What is Private Equity?

Private equity is a process in which a private equity firm purchases shares of a privately-held business, setting themselves up to manage the business before selling it for a profit. Private equity firms receive funding from investors, who then receive a cut in return once the business is sold.

Private Equity activities:

• Conducting an analysis of your business, operations and team to achieve a proper understanding of business drivers and goals
• Reworking strategies to overcome resource gaps and make business processes and operations more effective
• Analyzing the business for potential risks to provide a roadmap for compliance and reporting
• Integrating new technologies and systems to build sustainable, long-term capabilities

What does a Private Equity consultant do?

A private equity consultant acts as an extension of your business, analyzing your operations to provide recommendations for improvements and working with your high-level executives, investors and private equity firms to prepare your business to be sold for a profit.

Skills of Private Equity consultants:

• Conducting research to ensure proper understanding of key business drivers
• Analyzing and providing information about new investment opportunities
• Reworking business processes to become more sustainable
• Providing support for due diligence, including building models, preparing documents and conducting valuation
• Working with PE firms, investors and high-level executives to ensure the deal is properly executed
• Providing roadmaps for compliance and reporting

When should you hire a Private Equity consultant?

In order to be most attractive to potential private equity investors, experts suggest that your EBITDA lie somewhere between $3 to $5 million — however, if you’re planning to go the private equity route at any point in the future, it can be beneficial to turn to a private equity consultant ahead of time to help you put your best foot forward.

How can a Private Equity consultant help your business?

• Provides additional working capital as you receive new funding from investors
• Shares relevant industry connections and networking opportunities
• Diversifies business by integrating new processes and hiring high-quality talent
• Reduces overhead costs as operations are streamlined
• Assists with the development of new products and services
• Integrates stronger risk management strategies from rework of infrastructure and systems
• Provides expert insight intro growth strategies and dealmaking

Types of projects Private Equity consultants work on, plus examples:

Private equity consultants work on a multitude of different projects, including everything from collaborating across teams to understand key business drivers to providing support for a deal after it goes through.

Let’s take a look into one of the Bridgepoint Consulting team’s previous experiences as an example of the types of projects private equity consultants are often tasked with. For a more detailed look, please head to our private equity case study.

A client in the private-equity space was experiencing significant turnover of its junior and senior finance and accounting leadership positions. The turnover occurred shortly after they implemented a new Workday ERP system — and during a time when the company was facing continued growth through acquisitions.

These changes were also occurring while the labor market was extremely tight, making it difficult and time-consuming to hire fresh, high-quality talent to fill supporting roles to help guide the business through their rapid period of transition.

Our private equity consultants helped the client implement a new software system, provided guidance with tax filings, streamlined their financial planning process prior to the new fiscal year, and finally, were able to facilitate the selling of their business for a hefty profit within a compressed timeline.

As you can see, private equity consultants work on a multitude of different projects — but the bottom line is that they’re instrumental in preparing your business to make your investments as profitable as possible.