Private Equity Firms
Frontier has worked with a number of Private Equity firms to support them in post-close deals, diligence work pre-close, and developing go-to-market (GTM) strategies and strategic plans to ensure the strength of their portfolio grows and thrives.
I. Private Equity: Clients We Work With
Frontier works with private equity fund firms and venture capital firms with diversified and niche portfolios. Some clients ask us why private equity appeals to us as a firm. To put it succinctly, private equity funds are in a unique position to drive strategic change from the vantage point of growth, development, and revenue.
Those working in private equity are indisputably business experts in their own right. They come to us to deep dive into specific research-oriented
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What is a private equity firm?
Private equity firms are essentially investment management companies. This means they provide financial backing to start-ups or already operating companies. These investments allow them to share in the revenue, as well as to make strategic decisions when it comes to operations.
Due diligence and market research impact venture capital differently. Many venture capital deals focus on start-ups and emerging companies—as opposed to many PE firms’ stance of acquiring or investing in already established ones—making the level of risk quite high. All this means is that venture capital investments may not hold diligence in quite as high regard given the innate level of risk in capital investments in emerging companies.
II. Types of Business Ventures for Private Equity
There aren’t huge differences between business ventures in private equity vs venture capital, truth be told. Both types of companies are looking to make private investments in ventures and targets that will ultimately allow them to grow and expand. A private equity investment (or venture capital investment) will open doors for that firm to do more business dealings in that marketplace. It will also allow them to build up their portfolio, expand their offerings, and generate revenue.
Most of our private equity fund and venture capital clients are asking for help with merger and acquisition (M&A) support either before or after an M&A deal:
- Pre-close due diligence work to understand:
- How the target compares to competitors
- How the target’s market is expected to evolve
- What the total addressable market (TAM) looks like
- What the target’s customers think of the product (ie. willingness to pay, pain points, needs, challenges, whitespace, etc.)
- Post-close strategic support
- Go-to-market strategies for nascent or developing companies
- Strategic plans to generate revenue, drive growth, and reduce operating costs
- Foreign market entry strategy for firms to take a company internal
- Adjacent market entry strategy for firms to take a company across into another niche industry focus
Frontier understands the importance of conducting the proper due diligence in order for PE or VC firms to make big and important strategic decisions. We employ qualitative and quantitative research methods in order to answer your biggest questions.
Our research team is exemplary at delivering market research (ie. market sizing, trends, segmentation, VOC research, interest/demand, growth rate, etc.) and competitive analysis. We perform foreign market research regularly for clients looking to expand their product offerings and/or explore new/adjacent markets and are well versed in the research and strategic and financial modeling necessary to inform these big decisions.
For example, say you are wondering what customers think about the products or services delivered by one of your targets. Our research team will engage customers to get their actual take on existing products. This type of research takes a variety of forms, but focuses on customer interest, need, existing pain points that remain unaddressed, and opportunities to improve the product or service. This type of research is invaluable when it comes to making strategic long-term decisions to improve the brand and customer trust of a company.
Frontier can also support your company in its marketing and branding strategic endeavors. We are skilled in digital marketing strategy and can create a strategic step-by-step roadmap for your company to follow.
III. Common Questions in Private Equity
In the business equity space, Frontier clients are primarily concerned with the following questions:
- What type of diligence is necessary before an M&A?
- How do you develop a strategy post-close?
- How will this target succeed compared to its competitors in the next five years?
- Do customers know and trust our target?
- What does diversifying equity in business really look like?
- Should we be investing in private companies or public ones?
- How do you take a company public?
- How do we diversify our portfolio?
- What should a private equity fund structure look like?
- How do we compete with the biggest private equity firm in niche markets?
All of these questions are valid for firms looking to grow and evolve. At Frontier, we will discuss the importance of diversifying your portfolio and conducting proper due diligence on targets pre-close. This type of pre-deal work will only strengthen the opportunity your firm has to successfully build up its portfolio.
IV: Private Equity Industry Standards
In order for private equity firms to make smart, strategic investments, they need to have access to the right research and strategic plans. Though venture capital deals tend to be higher-risk than other forms of private equity deals, both need ample research before making a deal. The precursor to almost every M&A deal in private equity and venture capital requires diligence work. This is where Frontier comes in.
Our research team is extremely skilled at qualitative research to undercover customer interest and trust in established brands, as well as their competitors. Through a combination of primary and secondary research, we can also gauge market trends, size, and opportunities.
Once equipped with this diligence research, your firm can make a decision that is well-supported regarding its M&A targets.
Note: If you are wondering if you should be thinking about starting a private equity firm, we can help devise a business plan and develop a strategic roadmap for your company to address start-up challenges.
V: Private Equity: Frontier Case Study
Frontier has worked with private equity firms as clients across multiple industry verticals. Below are three examples of past projects: M&A target identification, pre-close diligence, and one post-close strategic planning.
Target Identification Project
Frontier developed a list of over 1400 targets for a PE firm looking in capitulated medicine. Our client was interested in understanding the landscape of HCPs in-network for Medicaid and Medicare patients, and whether they could compete by creating their own capitulated network. Our research provided an exhaustive list of independent physician-owned practices in over 150 zip codes that qualified as potential targets based on multiple qualifiers.
Pre-Close Diligence Project
Frontier conducted due diligence for a PE firm looking at part manufacturing targets in the classic truck market. Our team examined market trends, opportunities to expand adjacently, customer interest in 13 different after-market parts in the classic market, and how the market was expected to change in the coming five years. Ultimately there were three targets that offered security to our client, based on their position, existing brand, and customer interest. We also dove into SEO data to determine what types of search terms customers were searching for regularly to bolster our qualitative findings with quantitative evidence.
Post-Close Strategic Plan Project
Frontier developed a strategic roadmap for a PE firm that had just closed on a CPG manufacturing company. After performing a detailed examination of the current operating processes through internal interviews, ethnographic on-site research, and competitive analysis, we developed a two-year strategic roadmap based on lean manufacturing and change management principles to optimize the production process, cut down operating expenses, and enhance efficiency and revenue.