Ari Bendet is a newly appointed partner in our Corporate and M&A team, specialising in private equity. He acts for local and international private equity firms, as well as a diverse range of public and private clients in Australia and overseas, across sectors including technology, retail, hospitality, healthcare, infrastructure and financial services. Before joining Arnold Bloch Leibler in 2021, Ari was a senior associate in the M&A and Private Equity team at a leading Australian law firm. He also spent time on secondment in BGH Capital's legal team.
We spoke to Ari about his work building Arnold Bloch Leibler’s market-leading Private Equity practice.
You've played a key role in building ABL's private equity practice at a time when the market has become increasingly sophisticated. What has been most exciting about that journey, and what do you think clients are looking for from their advisers today?
It’s really fulfilling to be able to get complicated deals done, particularly in the context of challenging market conditions, with successful outcomes for both the private equity client and also the founder. In the vast majority of cases, there will be an ongoing partnership, so advisers need to be able to negotiate win/win outcomes that maximise the chances that the relationship will be a positive one going forward.
PE clients look for advisers who fundamentally understand founders - what makes them tick. It’s often not just about the size of the cheque. There are softer issues at play for the founders of private businesses.
Private equity has navigated a challenging few years, with higher interest rates, valuation gaps and increased competition for quality assets. As market conditions continue to evolve, where do you see the greatest opportunities for private equity over the next few years?
As part of the intergenerational wealth transfer, we are seeing an unprecedented number of baby boomer founders looking to exit from businesses they’ve held onto for a long time. Very often, for various reasons, these founders don’t have a clear succession plan for the business and, rather than handing it over to the next generation, their preference is to exit.
This trend represents a great opportunity for PE, as long as clients understand and are willing to accommodate the emotional issues at play in these situations. Australia has some very high-quality founder-led, privately held businesses, and the opening is there, particularly for mid-market PE.
“It’s really fulfilling to be able to get complicated deals done, particularly in the context of challenging market conditions, with successful outcomes for both the private equity client and the founder.”
You spent six months on secondment in BGH Capital's legal team. How did seeing transactions from the client's side of the table influence the way you approach deals and advise private equity clients today?
The experience reinforced my understanding that, while PE appreciates the role that lawyers play in a transaction, their focus is on keeping up the deal momentum. Advisers need to facilitate that by taking a pragmatic approach through different phases of the deal, rather than being a bottle neck.
PE firms are very sophisticated. They don’t want or need long winded advices, or to be told what they already know. They don’t want advisers who hedge. They want a clear view that is more than a legal view – it needs to be commercial and strategic as well. That includes being prepared to challenge instructions, where an adviser sees a better way forward.
Private equity investors are often looking beyond completing a transaction to creating value over many years. How does that long-term commercial focus shape the way you work with clients?
Typically, PE will rely on founders and management to help guide them, especially for the first few years, which takes us back to the idea of negotiating mutually agreeable outcomes for the PE client and the founder at the outset.
The terms of the transaction need to protect PE from a downside perspective, for example around restraints and bad leaver scenarios. On the upside scenario, they can include incentive plans or kickers to further motivate founders and management.
The bottom line is that, even if the shareholders agreement involves an 80/20 split, the business will be best run as a 50-50 partnership.
