Building the foundations for private equity funding
For many ambitious businesses, private equity (PE) funding offers an opportunity to scale, innovate and unlock new markets, however, securing investment is only part of the journey - building the right foundations is critical.
As PE firms are making significant investments into the business, they require transparent reporting, scalable controls and solid governance to show that the business is ready for continued growth and their investment is in safe hands. Failure to do this can lead to withdrawn investment opportunities, or lower valuations from the PE firms.
Transparent reporting
Clear and accurate reporting can help show PE firms that the business is performing as they expect and that there is a strategy in place to drive the business forward. Some ways to make your reporting more transparent can include:
- Simplifying the internal and external reporting processes
- Creating management information packs
- Improving data quality
- Aligning any reporting with the investor’s key performance indicators (KPIs)
Scalable controls
Risks evolve as a business experiences growth, so it is important to assure investors that the risks are understood and there are frameworks in place to manage them. These controls can increase the business’ resilience and make it more adaptable when faced with challenges. To help with this, businesses can:
- Assess the current risks and controls which are currently in place
- Develop internal control measures tailored to them
- Integrate risk management into everyday activities
Solid governance
Businesses that can show they have good governance can be attractive to PE firms looking to invest. To show that the business’ governance frameworks are effective, a business can:
- Ensure that board and management roles and responsibilities are clearly defined
- Make provision for an effective internal audit function to be in place
- Ensure they are in compliance with regulatory standards
- Introduce environmental, social and governance (ESG) and sustainability reporting
Preparing technology
Businesses looking for funding from PE firms should ensure that the technology is in place to be able to handle any potential growth, this can include:
- Checking the scalability of current IT systems and optimising them where necessary
- Strengthening cybersecurity and governance of data
- Aligning technology strategy with plans the business has for growth
- Ensuring real-time reporting and compliance are supported by systems
We’re here to help
Our specialist Risk Assurance team works closely with clients to help them assess and improve their governance, risk, reporting, and technology frameworks to attract and retain private equity investment.
Alongside this, our Corporate Finance team provides expert guidance on navigating the funding landscape - helping you assess suitability, prepare for investment and engage with the right partners. If you are considering PE funding, we recently published this insight to provide you with some key questions to ask yourself.
If you would like some further advice on how to prepare ahead of searching for private equity funding or would like some assistance with putting in place some of the actions discussed above, please get in touch with a member of our specialist team via the form below.
