[Step by Step] What is Private Equity and When Do I Need It? (Jeremy Muras, Lion Capital)
Future Commerce · with Jeremy Muras · December 12, 2019 · 52 min
Summary
This episode breaks down the world of Private Equity (PE) for ecommerce operators. It clarifies what PE is, how it differs from Venture Capital, and when a growing retail business might consider PE funding. The discussion highlights the strategic support PE firms like Lion Capital offer beyond just capital, focusing on scaling profitable businesses rather than early-stage high-risk ventures.
Key takeaways
Private Equity (PE) targets established, profitable companies with demonstrable financial history, unlike Venture Capital which funds earlier-stage growth with higher risk. Businesses considering PE should have a track record of profitability and scale.
PE firms often become majority investors, providing significant capital (Lion Capital typically invests over $100 million) and aiming for a positive return on investment over a 5-7 year horizon, often leading to an IPO or sale to another PE firm.
Beyond capital, PE firms like Lion Capital offer operational expertise and strategic guidance through "operating partners" who provide support in areas like digital, technology, marketing, and brand, helping portfolio companies optimize and scale.
PE due diligence is rigorous, focusing on de-risking investments for institutional investors like pension funds. This process aims to build confidence in a company's growth potential and value creation plan.
Founders considering PE should understand that involvement levels vary; some PE firms are passive, while others are highly active in operations to ensure successful scaling and growth of their investment.
Welcome to Step by Step, a 5-part series from Future Commerce to help walk you through how to launch and grow a successful business. This season, we're talking about funding. Today is episode 4. Today, Phillip & Brian are joined by Jeremy Muras of Lion Capital Group to discuss Private Equity.
What does this episode say about finance & fundraising?
Private Equity (PE) targets established, profitable companies with demonstrable financial history, unlike Venture Capital which funds earlier-stage growth with higher risk. Businesses considering PE should have a track record of profitability and scale.
What does this episode say about founder & leadership?
PE firms often become majority investors, providing significant capital (Lion Capital typically invests over $100 million) and aiming for a positive return on investment over a 5-7 year horizon, often leading to an IPO or sale to another PE firm.
What does this episode say about dtc strategy?
Beyond capital, PE firms like Lion Capital offer operational expertise and strategic guidance through "operating partners" who provide support in areas like digital, technology, marketing, and brand, helping portfolio companies optimize and scale.
What does this episode say about finance & fundraising?
PE due diligence is rigorous, focusing on de-risking investments for institutional investors like pension funds. This process aims to build confidence in a company's growth potential and value creation plan.
What does this episode say about finance & fundraising?
Founders considering PE should understand that involvement levels vary; some PE firms are passive, while others are highly active in operations to ensure successful scaling and growth of their investment.
