Private equity versus the strategic acquirer
When private equity firms and strategic acquirers meet on the M&A battlefield they come packing very different strategies and artillery. Who has the advantage?
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WITH private equity (PE) sitting on an estimated US$3.6 trillion of assets under management, including US$1.2 trillion dry powder (money raised but not yet invested), M&A (mergers and acquisitions) activity in 2015 is expected to be more frantic than ever and corporate acquirers should be prepared for the increased competition.
From fundraising to value creation post-closing, strategic and PE investors come from very different perspectives and have distinct and disparate strategies. Traditionally, strategic buyers were considered to be at a greater advantage, but this has changed over the last decade. In fact, a comparison of the two acquirer classes today suggests that PE companies' financial discipline, flexibility, focus and incentives structure have given them the edge.
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