The business landscape is constantly evolving, and business owners must work hard to adapt to change and stay innovative.
This is why many firms are hiring private equity consultants. These professionals are responsible for various operational improvements, blending skills and key insights to ensure a profitable outcome.
With private equity advisors on board, you can identify growth opportunities and avoid possible problems. While many organizations are partnering with private equity firms, freelance consultants can offer similar value and lower costs, and with greater flexibility.
These freelance consultants can help streamline operations and ensure that your assets remain positioned for long-term growth.
Whether you have a portfolio company, a firm looking to be acquired, or a corporation looking to make new acquisitions, a freelance PE consultant will be highly valuable.
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What are private equity consultants?
Private equity refers to a class of investment in which organizations raise capital to acquire and manage private firms (or turn public companies into private firms). The main goal here is the subsequent sale of these acquired companies to further make profits.
As an important part of the finance industry, PE firms are quite popular.
Notably, private equity consultants work closely with PE firms or portfolio companies. They can work with smaller PE firms, assisting with their set-up and fundraising procedures.
And with portfolio companies, these experts act as an extension of businesses, analyzing operations and making necessary recommendations.
Working with high-level executives and investors, PE consultants prepare your business for profitable sale and acquisition of attractive portfolios.
Many leading private equity firms have experts who can help you conduct in-depth research and provide details on key business drivers.
They also provide information on new investment opportunities, analyzing key values and potentials of various portfolio companies. Furthermore, these experts can rework business processes to offer sustainable guidelines and execute deals properly.
Why hire a freelancer private equity consulting?
You should know that PE firms have substantial funds provided by investors. But these funds remain unspent due to the absence of attractive investment options.
This issue results from competing PE firms competing for similar deals, affecting businesses involved in the sale, acquisition, and scaling of portfolio companies. However, a notable solution is outsourcing these jobs to freelance PE consultants.
There are increasing statistics on the satisfactory outcomes of choosing independent consultants over partnering with big external consulting firms or even having an in-house team. It’s the same for private equity consultants, as they’re operationally efficiency.
As qualified professionals, many freelance PE consultants help clients set strategic priorities and pursue business transformation for successful outcomes.
Freelance consultants are cost-effective, as you will only pay for the services they offer. Unlike PE firms, you get to specifically choose the specialists to work on your project with quicker turnarounds, since they don’t have to first report to several management teams.
And with freelancers, there is often no hidden agenda; they just analyze market dynamics and dive into value creation. Like most full-time PE experts or PE firms, a good freelance consultant will take charge of the following critical investment roles:
1. Deal sourcing strategies
When it comes to sourcing deals, these freelance consultants work tirelessly to identify and evaluate potential investment opportunities.
Leveraging their skills, experience, and professional networks, they can easily find companies that align with your investment criteria of a PE firm. Additionally, they’re fantastic at researching target companies that fit well with their vision for the future.
2. Development of finance models
With a freelance PE consultant, you can confidently develop well-detailed financial models that effectively forecast the performance of potential investments.
Such financial models provided by these experts can also help with valuation, feasibility assessments, and potential ROI. Thus, decision-making becomes easier, and this assistance effectively saves time and resources.
3. Conduct due diligence
The acquisition and management of private firms come with certain complexities.
However, a freelance PE consultant can review the legal, financial, and operational information pertaining to a target firm. Doing this, they identify potential risks and validate the information provided.
Thus, you can leverage the assistance of these experts to focus only on potential investments that align with your company’s strategy.
4. Acquisition of complementary companies
Mergers and acquisitions (M&A) remain a critical task for portfolio companies. Sometimes this process can be rigorous, with many loopholes.
However, a freelance specialist can help source specific add-on acquisitions, conduct due diligence, and ensure the smooth integration of these acquired portfolios.
5. Post-merger integration
As part of the investment process, a freelance PE expert will also help with integration following a merger/acquisition. For a smooth transition, they align operations, systems, and cultures to achieve an optimized performance and attain strategic objectives.
7 Tips for hiring a freelance private equity consultant
Finding a freelance private equity consultant is no easy feat.
But various freelance job platforms like Upwork have made the process easier by bringing global talent together in a single place. All that is needed is to create a job post or browse through the advertised PE consultant talents, and hire the right talent.
Nevertheless, it is important to find specialists who help you achieve your business goals, bringing critical skills to vetting processes and seamlessly integrating new acquisitions. So, here’s some helpful tips for private equity clients seeking to hire a freelance consultant.
1. Prioritize indutry experts
It is important to choose freelance private equity consultants who can conduct thorough research and understand key drivers of businesses. As it stands, the industry offers both growth opportunities and threats.
So, be sure to choose an expert who can efficiently analyze customer behavior and market trends to identify attractive investment opportunities. Such a specialist must also have critical skills for formulating strategies that can achieve the organization’s goals.
2. Assess their investment ability
Whether managing existing acquisitions or adding new companies to the portfolio, an effective analysis of potential opportunities is crucial. Thus, you must hire a freelance consultant with such necessary skills for decision-making and value creation.
They should assess the viability and financial stability of investment opportunities and how they can offer long-term growth. Also, these experts should help provide valuable advice on resource allocation and portfolio diversification.
3. Choose experts with connections
Good freelance consultants in private equity must have expertise in rework and optimization. You must hire a professional who can easily spot inefficiencies and proffer solutions to streamline operations and reduce operational costs.
It is only when they can enhance scalability and sustainability that your business performance can increase.
4. Due diligence expertise
As a pivotal skill, be sure to look out for PE consultants who can perform due diligence. You might want to look through their portfolio and experiences in documentation, building of financial models, and valuation analysis.
Doing so can help you reduce future risks and increase the likelihood that your business will secure successful transactions.
5. Ensure effective communication
Private equity is a complex aspect of finance, with many intricacies. Thus, you need freelance consultants who can effectively translate complex terms to ensure smooth business execution.
Negotiation skills are non-negotiable to ensure your company gets the best deals available. Also, you need a consultant who can leverage professional connections with executives, investors, and even PE firms.
6. Evaluate risk management skills
As with all businesses, risks are inevitable, but it is important to spot them early and seek ways to mitigate them. When hiring, choose consultants who can effectively rework your firm’s systems and infrastructure, confirming their robustness to support growth.
7. Skills in compliance and reporting
You need a freelance consultant who understands the industry’s regulatory frameworks. Also, they must be able to design clear guidelines for compliance and reporting, and create standard frameworks to maintain efficient operations.
Salary structure for freelance PE consultants
Full-time professionals often receive a base salary and other incentives (mostly following the 2-and-20” model). They can also earn an additional 20% on profits that exceed a specific threshold, making their earnings among the most lucrative in the financial sector.
However, freelancer payments are mostly based on hourly or daily rates; on Upwork, hourly rates generally start at $75/hr. The fees of freelance PE consultants are a critical aspect that businesses must consider when hiring.
Notably, this involves several components, including the project’s scope and budget. Also, rates differ by niche; experts handling due diligence, investment strategy, and valuation charge differently, and the cost further varies by location.
Conclusion
Private equity firms and individual businesses can outsource certain projects to freelance consultants to enhance business operations.
These freelance PE experts can take on various projects, including deal screening and portfolio management, while delivering top-quality services.
Furthermore, these freelance consultants leverage their connections with other industry stakeholders to drive business growth. These experts don’t focus solely on acquisition; they can also aid the growth of portfolio companies after a PE firm invests.
For this, they develop new strategies for scaling these companies, set the right price for products and services, and eliminate flaws in the operational system.