STRATEGY CONSULTING GROUP

 
 
              SCG

PRIVATE EQUITY

The private-equity industry is undergoing a shakeout. After years of record investment, PE funding, debt availability, and exit opportunities have decreased sharply. Now, only funds with enough committed capital—and a solid track record of above-average returns—will survive. The key priority for most firms is to stabilize the portfolio and ensure that current investments weather the storm. On the other hand, the economic crisis has also created some attractive investment opportunities. Today, PE firms face the following important questions: 

  • How can we align our fund strategy with the investment criteria of the changing limited-partner universe?
  • How can we identify investment opportunities in an environment that is rapidly changing across all regions, industries, and capital markets?
  • How can we navigate our portfolio companies through the crisis?

 

As the preferred consulting partner for several leading PE firms worldwide, SCG provides a full spectrum of services covering the entire PE value chain. Working with portfolio companies to improve earnings before interest, taxes, depreciation, and amortization is one of the main pillars of SCG's support. We also work with our clients to identify targets for add-on acquisitions. Additionally, we provide PE fund managers with insights on industry dynamics and offer due diligence support. SCG's PE team is part of the global Corporate Development practice, which consists of trained professionals with significant experience at all SCG levels worldwide. Our core PE team works closely with experts from the functional and industry practice areas, as well as with turnaround specialists. In addition, our corporate-finance task force and provide comprehensive support for our PE clients.

  • Private equity is ready for a comeback, fueled by more stable debt markets and nearly a trillion dollars in uninvested capital.
  • This decade could be even better than the last for private equity in India if regulatory and other barriers fall.
  • A new blueprint for private equity; leverage, multiples and GDP growth are no longer enough to propel returns.

 

SCG's work with private equity does not stop with buyout funds. We work across fund types, including debt, infrastructure, real estate and hedge funds. We also work for many of the most prominent limited partners to private equity firms, including sovereign wealth funds, pension funds, financial institutions, endowments and family investment offices.Private equity consulting at SCG represents experienced professionals serving private equity clients. SCG has deep experience working in all regions of the world across all major sectors–from consumer products and financial services to technology and industrial goods. We support our clients across a broad range of objectives:

  • Deal generation
  • Due diligence
  • Portfolio value creation
  • Distressed turnarounds
  • Exit planning
  • Firm strategy and operations


 

Investment Approach

SCG focuses on small to mid-sized companies with solid business models and strong growth potential.


The strategy of SCG is to identify and finance fast-growing companies in the industry sectors in which we provide expertise in US and around the globe, then help them to unlock value and generate competitive long-term returns on invested capital.

 

The SCG's management provide expansion and buy-out capital to companies with proven business models and large addressable market. SCG invests between $100,000 and $1,000,000 in each company for an average period of three to five years before achieving liquidity through a sale to a strategic partner. We have a strong preference for control positions in our portfolio companies and offer flexible financing structures, including additional share issues and buy-out opportunities.

 

In evaluating and selecting companies for investing, we look for the following investment criteria:

  • Market Position

How large is the market? Is the company a leader in its industry or market niche? Does it have the potential to become one?

  • Management

What are the management’s strengths and weaknesses? Are their incentives aligned with those of investors?

  • Growth Potential

Does the company have a clear competitive edge sufficient to scale up rapidly in its target market?

  • Cash Flow and Profitability

Is the company at or near positive cash flow, and does it have an attractive level of profitability?

  • Control

Will the investment secure control of the company or a significant minority interest, with adequate protective covenants for investors?

  • Identifiable Exit Prospects

Are there multiple exit opportunities for the proposed investment, either through sale to domestic or international buyers, strategic buyers, or on public securities markets?

  • Internal Rate of Return

Is the potential return commensurate with the risk in the context of the Fund’s overall portfolio of investments?

 

SCG strongly believes in the investment potential of growth companies around the world. We see it as one of the few investment classes that combine a high degree of innovation, low market concentration, buoyant M&A and modest government regulation. SCG has built as a successful track record and extensive connections among the industry companies and entrepreneurs in US and around the world, and will leverage its position going forward.