May

Private equity acquisitions and investments plentiful in BPO

by Michael Riek
Practice Leader at Charles Aris Inc.

Private equity firms are sitting on massive amounts of cash and are looking for companies in which to invest. Every quarter, we’re learning of these investments, acquisitions and mergers in the largest organizations in the Business Process Outsourcing sector. These firms are growing organically but are growing at a much faster rate through acquisition, and many of these transactions are funded through private equity.

What is private equity?

Private equity is investment in (private) company shares. Private equity firms can purchase a minority, majority or all of a company’s shares. Typically, they prefer to retain senior leadership; after all, these are the individuals who have driven results. In many cases, private equity firms use a purchased company as a platform to combine or add other purchased companies to accelerate growth. Private equity firms traditionally have a liquidity strategy preacquisition, which is usually tied to the time required to turn around a distressed organization or to achieve certain growth targets. The liquidity event could be associated with an initial public offering or in the sale of the new, larger and presumably healthy company.

It’s a great time to be a smaller BPO firm

There are hundreds if not thousands of BPO organizations globally, and private equity firms are investing in companies of all sizes. In fact, many BPO firms between $10 million and $50 million in annual revenue are critical components, serving as the platform for adding numerous smaller firms or as a bolt-on to help achieve overall growth and a liquidity event. These companies were typically created by entrepreneurs who enjoyed the freedom and control to build and make strategic decisions for their company. These entrepreneurs typically also assumed all the financial risk and pressures associated with owning a company.For such owners, selling a portion or all of their company enables them to diversify their wealth. In many cases, the owners of a BPO firm sell a significant stake and remain involved or even drive the new growth strategy. This provides an opportunity to participate in a second liquidity event several years later, when the organization is ultimately sold.

Michael Riek, who has led several global BPO organizations as a serial entrepreneur, enjoys focusing on growth strategies in sales and marketing. Michael leads the Charles Aris BPO & Contact Center recruiting practice, helping senior leaders identify talent for key operations, client services and business development positions. To learn more about the value of Charles Aris recruitment services for your organization, email Michael at michael.riek@charlesaris.com or call him at 336-378-1818 x9106.