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Overview
- Introduction to RLH
- Private Equity Overview
- Value of a Private Equity Partner
- Evaluating Viable Companies
Overview of Private Equity The Aerospace & Defense Forum - - PowerPoint PPT Presentation
Overview of Private Equity The Aerospace & Defense Forum - - PowerPoint PPT Presentation
Overview of Private Equity The Aerospace & Defense Forum February 2019 Overview Introduction to RLH Private Equity Overview Value of a Private Equity Partner Evaluating Viable Companies 1 Introduction to RLH Private
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Introduction to RLH
- Private equity firm with over $1 billion under management targeting
high-growth, lower-middle market enterprises
- Founded in 1982
- Executed dozens of investments and generated annual returns in excess
- f 30% over more than 25 years
- Consider $30 to $75 million equity investments in companies with
revenues ranging from $30 million to $250 million
» Healthcare » Business Services » Government Services
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Introduction to RLH
DRIVERS Technology Demographics Regulatory Cultural SECTORS Business Services Healthcare Government Services Opportunistic MANAGEMENT Track record of growth and success Proven leader(s)/management ATTRIBUTES Key competitive advantages Sustainable opportunity VALUE-ADD Navigate the challenges of growth Experienced partner with management RESULTS At least 20%+ revenue/profit CAGR Ability to build strategic value
RLH Growth Formula
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Overview
- Introduction to RLH
- Private Equity Overview
- Value of a Private Equity Partner
- Evaluating Viable Companies
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Private Equity: An alternative asset vehicle that makes direct equity investments in private operating companies to generate superior returns for investors. Venture Capital: Fund start-up and early stage businesses using equity. Cover operating losses and / or fund research and development. Growth Equity: Provide expansion capital or shareholder liquidity for middle market businesses with a combination of debt and equity. Leveraged Buyout: Acquire control positions in established operating companies with strong cash flows using substantial debt and some equity.
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Private Equity Overview
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Private Equity Overview
Venture Capital
Characteristics Highest Growth Rate Risk: Concept Risk Capital Structure: All Equity Value Creation: Technical R&D Innovation Drive Market Demand
Growth Equity Leveraged Buyout
Characteristics Characteristics High to Moderate Growth Risk: Execution Risk Capital Structure: More Equity w/ Less Debt Value Creation: Grow Revenue Grow Earnings & Margins Expand Multiple Slow Growth Rate Risk: Financial Risk Capital Structure: More Debt w/ Less Equity Value Creation: Pay Down Debt Expand Multiple
Three private equity classes fulfill lifecycle of an operating company.
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Private Equity Overview
Three private equity classes fulfill lifecycle of an operating company.
RLH Venture Capital (Development Risk) Growing Middle Market (Execution Risk) Leveraged Buyouts (Financial Risk) $1 BN $200 MM $20 MM
Profitable
$0 Minority Ownership Majority Time Growth rate maturing but still attractive
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Overview
- Introduction to RLH
- Private Equity Overview
- Value of a Private Equity Partner
- Evaluating Viable Companies
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Value of a Private Equity Partner
An equity partner should provide: Strategic guidance
- build or buy, geographic expansion, new products or services, focus
- guidance, not mandate
Corporate finance expertise
- ptimizing capital structure: debt vs. equity
- commercial banking relationships
- investment banking relationships
- assessment of acquisitions and exit opportunities
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Value of a Private Equity Partner
An equity partner should provide: Management recruitment and retention
- sourcing and evaluating candidates
- compensation structures
- credibility in attracting top talent
Board recruitment
- experienced senior talent: “been there, done that”
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Value of a Private Equity Partner
How entrepreneurs and companies should validate an equity partner Superior track record of investing Industry experience Attention from experienced principal Good references from CEOs Focus on similarly-staged businesses Shared business values
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Overview
- Introduction to RLH
- Private Equity Overview
- Value of a Private Equity Partner
- Evaluating Viable Companies
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Evaluating Viable Companies
Equity Scorecard – Attracted to specific characteristics
- Strength of management team
- Attractive growth dynamics
- Strong business fundamentals
- Compelling industry attributes
- Valuation and exit opportunities
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Strength of Management: The most important criterion
- Proven track record of success
- Relevant industry experience
- Characteristics: Passionate, Smart, Motivator, Integrity
- Attracts and retains good employees
- Personal financial commitment
Key Characteristics of Viable Companies
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Attractive Growth Dynamics:
- Growing marketplace
- New products or services
- Geographic expansion
- Market share expansion
- Potential acquisitions
Key Characteristics of Viable Companies
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Strong Business Fundamentals:
- Value proposition of the service / product offering
- Differentiating characteristics
- Attractive operating model & superior margins
- Reasonable growth strategy
- Established sales and procurement channels
- Diversified customer and supplier base
Key Characteristics of Viable Companies
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Compelling Industry Attributes:
- Size and growth characteristics of industry
- Barriers to entry
- Customer perceptions and preferences
Key Characteristics of Viable Companies
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