How RMB Corvest is partnering for growth in private equity ventures
The firm is usually a minority shareholder with the management team holding a significant portion of the shares.
RMB Corvest, the private equity specialist, routinely looks to establish healthy long-term partnerships with proven businesses.
“Our interest lies in forming long-term partnerships that yield maximum returns for all parties involved. This allows for solid growth and better governance within the business,” says Martin Coetzee (pictured), executive director.
“We look to institute strong relationships with our management teams from the get-go. We believe that in order to maximise the potential of each investment, management alignment and participation are critical.”
“We don't look to get operationally involved in the underlying businesses, our strength is to identify the right management team and partner with them. We trust them to run the business, while we get involved more on the strategic side at a board level. It also means that we can monitor the performance of the business without being involved in the minutia of the day to day operations.”
RMB Corvest offers both strategic and financial support to skillful management teams with the entrepreneurial acumen to run their own businesses. “The local market demands entrepreneurial thinking particularly for mid-sized, privately-owned companies,” explains Martin. “We are able to offer such entrepreneurial management teams the ideal tools to become successful co-owners of their businesses.”
As the management team has skin in the game, they now think differently in regards to the business. It is also why it doesn’t buy 100 percent of businesses. RMB Corvest is usually a minority shareholder with the management team holding a significant portion of the shares.
Private equity partnerships usually cover a variety of relationships.
“Naturally we partner with the business in which we invest, including the various stakeholders in the business. In addition to the management teams of these businesses, we also have partnerships and relationships with established Black Economic Empowerment investors, with private investors, advisors and financial institutions.”
“The essence of what we do revolves around people, and so managing the different relationships and the expectations that come with that are part of the process. We believe that we do this well because the partnership concept is critically important to us.”
RMB Corvest has long-standing relationships - some spanning over 30 years, with many of the banks, advisors, BEE and private investors it works with. “This means that we’ve earned their trust, and they continue to work with us as well as initiating some opportunities to jointly fund transactions.”
“Before any transaction, we'll work through the strategy with the target management team. As a rule, they have a clear idea of where they want the business to go, we’re able to formalise this process and advise on how to implement any plans for success.”
“Post-acquisition, we continue to monitor any progress against our initial business strategy and base case. We find that when any goals and targets set in the business strategy are not being met, it serves as an early warning sign. Often, where senior debt obligations are being missed, governance issues are raised, or if growth isn’t being achieved, we need to address these issues in order to mitigate them. It’s important to keep checking in with the business, management and the Private Equity investors, to ensure that you’re on the right track – and if not, why not?”
RMB Corvest believes that the private equity relationship introduces a level of maturity, along with internal financial rigour. Additionally, regular board meetings create a culture of reporting discipline. “We've seen this transform a number of business we’ve been involved in. Good corporate governance can impact the tangibles (financials) and intangibles (organisation culture) of the business.”
Identifying a Private Equity partner that can provide market insights while establishing local connections, can make all the difference when looking for funding. “By teaming up with well-established players, businesses give themselves a far more strategic edge. They can also create a platform from which to actively seek out additional deals that could prove advantageous to their portfolios,” concludes Martin.