Working effectively with special situations equity investors
The economic strain of COVID-19 and its aftermath has heralded a wave of special situations fundraising across the globe. Investors are hungrily eyeing opportunistic situations across a number of sectors, and as such private equity firms have been able to raise significant pools of capital for both equity and debt-based opportunities.
Whilst many would associate these investors with stressed or distressed assets where shareholder outcomes can be limited, in reality, special situations covers a much wider remit. These investors can be an effective source of funding for a range of transactions such as management buy-outs of parts of larger groups, recapitalising a fundamentally sound business that currently has an inappropriate capital structure or for a business that needs equity to grow and possibly perform acquisitions in a more challenging sector.
A deeper understanding of the benefits of a special situations investor is needed in the current market in order to best utilise their expertise and capital.
A deeper understanding of the benefits of a special situations investor is needed in the current market in order to best utilise their expertise and capital. These agile investors can make quick decisions and will have a different appetite for risk than the traditional private equity groups. Experienced special situations advisors like Clearwater International are well placed to navigate these investors and ascertain which situations best fit their criteria.
It is important to look past the misconception that special situations players are purely driven by price. Complex and challenging situations where fundamentally good businesses are constrained by factors outside of their control prove to be fertile ground. As such, the fundraising process needs to be sophisticated in that the underlying positives of the business need articulating succinctly, as do the opportunities ahead. Hurried processes with insufficient preparation or understanding of the nuances of the business will fail or else revert to a price-driven discussion.
The Clearwater team is well versed in these complex situations and are able to manage a robust process that ultimately delivers. By utilising senior deal leader’s expertise, bolstered by deep sector knowledge and supplemented by an international perspective, we are able to run an efficient and effectiveprocess.