Seed to Exit–A UHNI’s Private Equity Journey with MFOs

Private equity stands out as one of the most complex asset types under the alternative investments. Beyond capital, successful investments in this space require effort, strategic insight, and specialized expertise. While the risk of negative returns remains, the potential rewards can surpass even the most lucrative real estate investments—an allure that also allows UHNWIs to pursue personal passions within a specific business domain, adding meaning alongside financial returns.

Unlike typical venture capital firms that often aim for rapid gains, family offices like Entrust are fueled by patient capital. This allows us to approach private equity not with a transactional mindset, but with the perspective of an art connoisseur acquiring an undiscovered masterpiece. Our role spans the full private equity journey from seed to exit, ensuring that each phase aligns with our clients’ long-term vision and values.

A. Pre-seeding Services: Due Diligence

The nascent private equity landscape in India has seen sharp highs and lows. UHNWIs are often influenced by industry trends or peer success, making objective advisory critical. At Entrust, we approach private equity opportunities with the prudence of a seasoned Test cricketer, rigorously examining every opportunity but engaging only when initial due diligence suggests genuine potential. This includes comprehensive research on the founding team, the product or service, and current market conditions, including trends and competition. We also thoroughly review all legal documentation related to the target company at this stage.

B. Seeding Services

1. Negotiating Terms: While commercial terms are typically central in initial agreements, both parties may wish to include terms regarding the future role of the current management team. We facilitate these discussions to ensure clarity and alignment.
2. Structuring the Investment: We advise clients on selecting the most appropriate instrument—equity shares, convertible securities, or preference shares—based on their unique goals and market conditions.
3. Legal Assurance: To safeguard the acquisition, we collaborate with legal experts, ensuring all terms are secure and legally binding.

C. Growth and Oversight from Seeding to Exit

The period between seeding and exiting a private equity investment typically spans 1 to 6 years. During this phase, we actively manage and support our clients’ investments:

1. Building the Leadership Team: From appointing board members to hiring C-suite executives, we help recruit the leaders best suited to drive growth.
2. Strategic Consolidation: If needed, we assist in restructuring the new company or integrating it with existing client entities.
3. CFO Services: Our in-house finance experts provide crucial CFO services, addressing common financial management gaps in young startups.
4. Mentorship: We identify mentors well-suited to support and guide the founding team throughout the journey.
5. Regular Reporting: We monitor developments within the acquired company and its sector, compiling MIS data to deliver insightful, consolidated reports to our clients.

D. Exiting Services

Exit strategies may vary, from IPOs to strategic sales to private equity firms/UHNWIs. When the time comes, we analyze several factors to maximize the exit’s success:

• Market Analysis: We assess recent exits in similar sectors and evaluate current market valuations to determine optimal pricing and potential value realization.
• Timing & Tax Planning: We carefully time the exit to optimize tax outcomes for our client, phasing out investments when beneficial.

With this groundwork, we negotiate and finalize commercial and non-commercial terms with the same rigor applied during the seeding phase, ensuring a seamless and advantageous exit.

Private equity investments require both deep expertise and a foundation of trust. Entrust has built this vertical with a team of in-house and third-party experts who have a proven track record in managing and executing multimillion-dollar PE deals. We approach each investment with a meticulous, client-centered approach, ensuring that every decision aligns with the long-term vision of our clients.