After the global financial crisis the most important lesson learnt by the business world was – Expect the Unexpected. In a post global financial meltdown environment many private equity firms today are operating within limits and under ever increasing uncertainty.
Keeping in view this scenario how do businesses balance buy and sell side opportunities and more importantly how do they expand into new markets and diversify into new revenue channels when now more than ever the focal point of all business is keeping a check on their existing portfolio’s while at the same time meeting up the to the challenge of new regulatory frameworks and risk management techniques.
It is important for businesses to gain a perspective, even though after the market turmoil faced and the industry left reeling, many groups are now coming forward and looking into deals and opportunities.
In the light of macro-economic uncertainties it is important to point out that private equity companies similar to that of other industrial giants are just as much exposed. Within this frame it is also important to consider the issue and impacts of sovereign debt within the US and European Union which is just coming up to the horizon.
However in the light of the above issues it is still seen that private equity is able to demonstrate a certain level of resilience and nimbleness with an ability to withstand shocks. Keeping this in mind, it is no surprise that most private equity investors have been able to come out of the recession with a renewed sense of aggression and focus on organic revenue growth. The key however to this is applying and taking up more entrepreneurial experts and mindsets from the market and adding them onto your portfolio.
We will for sure see private equity on the rise again as they take the helm as companies who are able to demonstrate an active ownership skill, this is evident from examples which can be taken from North America and Europe on how private equity creates value. This inevitably has an effect and enables them to create more stronger and profitable businesses.
Coming back to point of expanding, it is seen that institutional investors are now taking an active part in Latin America’s growth and that of Brazil in particular. As a result a surge has been noted in their keenness on expanding private equity programs in this region.
On the other hand Risk, Regulation and Compliance also play an important role. This is especially when considering market volatility and pricing pressures – these are tools which are usually in play to create competition and opportunities. Businesses on the whole need to develop strategies in order to provide a balance between risk and opportunity.