Barely a day has gone by without yet another deal being struck between a private equity firm — or increasingly consortiums of firms — securing the ownership of attractive companies. Many of these target companies are no longer the fledgling or flailing type; indeed, ever-growing private equity firms are increasingly using consortium vehicles to target some of the world's biggest and most famous companies and brands.
In both the US and UK, private equity has moved beyond mid caps and into the big league of listed companies. In short, almost nothing appears out of reach of the private equity backed buyout.
What is becoming increasingly apparent is the stakes are high and appear to be getting higher. But what is often not appreciated is that in the midst of all this frenzy, there are some interesting dynamics and differences that are inherent within and around the private equity firm and the deals it strikes.
For some years, RHR International has been watching this with ever-growing interest, both from inside and outside our private equity clients. What we have been observing are fundamental differences in the way private equity firms are resourced and run, and equally in the way they approach and assess their next targets. But this is mainly anecdotal evidence. As psychologists, we wanted to delve further into some of these hypotheses and test them through more formalised research. Armed with more conclusive evidence of what is actually backing and driving these burgeoning deals, we hope to better understand the types of people, dynamics and associated practices of private equity firms for our clients. Our intentions for this are three-fold: to better inform the industry, serve our clients and ultimately, help to make them even more effective in the management of their companies — both within their portfolios and their own.