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Private Equity Chief Dealmakers

The Job

The work of chief dealmakers is extremely complex and demanding. The entire acquisition process can last anywhere from a few months to a year depending on the size of the transaction, PE firm, and acquisition target involved; the firm’s investment committee process; the manner in which the investment opportunity was sourced; and other factors. The countless responsibilities of chief dealmakers cannot be easily summarized in a short article, but the following paragraphs provide an overview of their major duties:

Sourcing

  • identifying and evaluating potential acquisitions with the assistance of lower-level dealmaking professionals, research associates and analysts by identifying acquisition or investment targets, reaching out to his or her network of industry contacts, cold-calling executives at promising companies, or relying on sourcing proposals from members of the dealmaking team or through a financial intermediary such as an investment bank, or responding to inquiries from public-traded companies requesting a takeover or merger request     
  • developing an investment thesis (which outlines areas of savings, cost-cutting plans, new ventures, the state of the company’s balance sheet, and how much debt it can take on), a strategy thesis (a plan to carry out the investment thesis), and an investment memorandum (which includes details of the proposed transaction; an overview of the target company and its products or services, finances, etc.; a summary of risks and key areas of due diligence’ a valuation overview; an exit strategy, etc.) for relevant investors
  • presenting investment proposals to the investment committee
  • moving forward with the acquisition process if approved by the investment committee

During the Transaction

  • serving as the primary negotiator for approved transactions
  • directing a transaction execution team that consists of legal, accounting, risk, and due diligence professionals
  • working with external capital providers (institutional investors, hedge funds, investment banks, other PE firms, etc.) to obtain the necessary leverage at low enough rates to make the proposed deal feasible
  • structuring and negotiating detailed terms of the buyout offer, including a per-share price, but also a detailed strategic plan for the company over the life of the PE firm’s involvement (i.e., how it can bring value to the company and how much the firm plans to invest in its operations).
  • leading due diligence (e.g., business/market, financial, tax, operational, etc.) initiatives
  • coordinating the closing of the transaction

Post-Closing

  • implementing the exit strategy as quickly as possible to return value to investors, including interaction with the management team of the portfolio company to implement proposed changes (e.g., cost-cutting measures, changes in sales strategies or manufacturing processes, layoffs, etc.) to improve its operational performance and profits