Private equity firms’ hands-on approach and focus on partnership is resonating with entrepreneurs and leading to successful exits in Latin American markets, according to a study conducted by the Emerging Markets Private Equity Association (EMPEA) and Ernst & Young LLP.
The study showed private equity buyers in Latin America to be highly entrepreneurial, employing their own networks to find opportunities and in most cases seeking companies where they could partner with existing management to enhance the core business model. Two-thirds (65%) of deals sampled were proprietarily sourced. In three quarters of deals studied, the investment thesis hinged on backing incumbent teams or entrepreneurs with a vision for the business; new management was introduced in only 25% of deals.
Sarah Alexander (pictured), EMPEA’s Founding President and CEO, says: “Our study illustrates that private equity investors in Latin America provide more than just capital, they employ strategies that are yielding larger, more professionalized companies ready for the next stage in the region’s development.”
Commenting on the findings, Philip Bass, Ernst & Young’s Global Private Equity Markets Leader, says: “We are finding that the rest of the world is evolving to replicate the model in the emerging markets – focusing on minority deals, equity deals and working closely with portfolio companies to add value.”
