Develop screening criteria for private equity targets in a sector:
1. Financial Criteria:
- Revenue range ($)
- EBITDA range ($)
- EBITDA margin minimum (%)
- Revenue growth (historical and projected)
- Customer concentration limits
- Working capital intensity
2. Business Model Criteria:
- Recurring revenue % minimum
- Contract visibility
- Margin expansion potential
- Fragmented market opportunity
- Value-add levers
3. Market Position:
- Market share requirements
- Competitive moat characteristics
- Industry growth outlook
- Secular tailwind exposure
4. Management:
- Owner-operator preference
- Rollover requirements
- Key person retention importance
5. Deal Structure:
- Target ownership %
- Leverage capacity
- Seller financing potential
- Earnout applicability
6. Value Creation Plan:
- Operational improvements
- Buy-and-build potential
- Geographic expansion
- Product line extension
7. Exit Considerations:
- Strategic buyer universe
- Sponsor-to-sponsor potential
- IPO candidacy
- Target hold period
Output: Detailed screening criteria with priority ranking.
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PE Target Screening Criteria
Private EquityLBODeal Sourcing
ThesisBoard
Author
Asset Class:Private Equity
Research Type:Fundamental
Stance:Neutral