Mark Hauser Explains the Process of Private Equity Deals
Co-managing partner of Hauser Private Equity, Mark Hauser, discusses the evaluation criteria sought by investors and how private equity deals are handled. Mark Hauser, a principal in the private equity industry, defines a leveraged buyout as an acquisition made with the help of additional funds or leverage. In this example, a private equity firm has borrowed money to acquire a majority stake in the target company.
Details of a Typical Private Equity Deal
When investing, private equity firms care only about the return on their money. The private equity investor must choose an investment target to generate the desired return.
Engaging in Meticulous Research
The private equity firm does exhaustive research into all facets of the target company before deciding whether to acquire. Mark Hauser explains that, like the bidding process, due diligence is broken down into stages.
Formats for Conducting Research
When investigating a potential investment, private equity firms often focus on three main facets of the company. Most of an analyst’s time is spent in the business world, either as a full-time employee or a paid consultant. Validating rather than examining specific facts is the focus of both financial and legal due diligence, yet both are crucial.
The Buying Choice Process
The private equity firm’s investment team will bring the offer to the investment committee if the firm’s analysts discover no major red flags. After this committee has signed off on the deal’s financial structure, the attorneys for both sides can negotiate the agreement’s final parameters.