Private Equity Buyouts Strategic Partnerships to Optimize on Risk/Effort Trade-offs

Private equity (PE) investment professionals juggle their time in a variety of activities as they strive to achieve a fine balance between making right investment decisions and maximizing the value of existing investments for optimal exit valuation. However, are all these activities equally critical and do they entail the same degree of risk? Certainly not. PE firms prioritize activities based on risk perception and optimize time allocation so they can focus on tasks with greater risk and/or those that provide higher value addition. Based on this perceived existence of risk in various strata of the deal marketplace for PE firms, we attempt to identify a framework that can help PE firms benefit from external knowledge support.

Key Takeaways

Risk distribution across PE activities.
Scope of risk/effort trade-offs undertaken by firms and investment professionals.
Diversity among PE firms in deploying resources.
Framework to identify low-risk “offshore-able” activities.

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