Investing for the Long-term — Maia Business Builders

Investing for the long-term

We believe in the power of compounding over the long-term and providing management teams with the best support for them to deliver on a business' potential. Our long-term approach takes away short-termism, enabling decisions and investments that maximise future outcomes.

Bain & Company conducted an illustrative returns analysis for a theoretical long-hold structure selling an investment after 24 years vs. a typical private equity fund selling four successive companies over that period:

Figure 1: Long-hold funds outperform over the long haul. Bain & Company analysis showing multiple of investment (after taxes and fees) over a 24-year investment horizon, comparing a long-hold strategy reaching approximately 8x by year 24 against a short-duration strategy reaching approximately 4x.

Source: Bain & Company analysis.

Bain's analysis suggested a long-term partnership could support a 2x outcome vs traditional private equity (and the disparity would be even greater with shorter hold periods, in-line with private equity's typical 3-5 year targets).¹

Key advantages of a longer-term partnership:

Reduced management distraction: Management teams can focus on long-term value creation and operational improvements rather than being distracted by the immediate, short-term pressures of an impending sale.

Reduced short-termist decision making: Private equity can pressure management teams to reduce investments and cut costs, maximising short-term EBITDA, in the run up to a sale (which often do not materialise) to the detriment of long-term growth.

Access to incremental capital: Willingness/capacity to invest in the business throughout the investment partnership – not restricted due to fund constraints; enabling the business to capitalise on opportunities whenever they arise (including being opportunistic through downturns).

Reduced transaction costs: By reducing the frequency of buying and selling businesses, owners save on taxes, advisor fees and other transaction-related costs.

Flexible investment horizon: Owners have the freedom to sell an asset at the truly optimal time – if they want to – rather than being forced to exit due to a fund's life cycle or other exogenous factors.

Get in Touch

We are always looking to connect with exceptional operators and business owners building outstanding companies. If you are considering a partnership, succession solution, or growth capital arrangement, we would welcome a confidential conversation.

Opportunities@maiacapital.co.uk