BluWave works with over 500 PE firms from around the globe as well as their portfolio companies and proactive independent companies, connecting them with BluWave-vetted, best-in-class, third-party service providers across a variety of resource and functional areas. From information technology and manufacturing to healthcare, consumer goods, and beyond, our clients are expert business builders. In other words, they have their heads in the game and their hands on the pulse of news and insights you can use.
Check out the latest, curated collection of our client’s musings on employee-based ownership, developing ICPs, creating an employer brand, and more.
KKR: Employee Ownership
Seeing success after implementing broad-based employee ownership programs in several portfolio companies, Pete Stavros, Co-Head of Americas Private Equity at KKR, shares his insights on the benefits of employee ownership.
ParkerGale operating partners Cici Zhang and Paul Stansik speak on the importance of defining an Ideal Customer Profile (ICP) and discuss their steps to building out an ICP.
With an increasing emphasis on talent and a push towards putting employees first, it is critical for employers to proactively work to attract and retain top talent. Insight Partner’s Talent COE, Hattie Young, identifies a 4-step process for building a compelling employer brand to attract the best talent.
The diligence process should be a two-way street. Montage Partners highlights diligence on the sell side and provides questions sellers should be asking potential buyers.
With recession risks in the US and global economy, Joe Zidle of Blackstone gives his insights to dealing with a tough market, speaking to inflation, a strengthening labor market, and shifting consumer demand.
Read what some of our clients had to say last month on value creation through human capital, continued recessionary pressures, DEI, digital marketing, and more.
It was refreshing to be back in person with hundreds of PE ops partners to learn from their first-hand perspectives. Key takeaways included:
Executing value creation means that human capital remains a top priority for PE firms.
Ensuring the right management team and board leadership are in place allows for efficient execution against the value creation plan. Resource scarcity has had an immense impact on firms’ abilities to implement and execute plans. Industry leaders discussed tips for how PE firms can source and retain the right people at our recent human capital forum.
Leveraging technology to increase efficiencies is non-negotiable.
The aforementioned human capital challenges have tremendously accelerated digital transformation plans. PE firms are laser-focused on leveraging technology to increase efficiencies and reduce manual tasks to align with value creation plans. This allows portcos to reallocate resources to higher impact areas and rely on technology to solve for the monotonous, repeatable workflow.
Building trust with portcos’ management teams early on is essential.
Trusted partnerships between PE firms and their portfolio companies are vital to a successful investment. Building executive buy-in earlier on in the diligence process with a people-centric approach puts PE firms in a win-win situation. When the (right) management team has ownership in the decision-making process, this creates invaluable efficiencies between the PE firm and portco leadership teams.
If you’re interested in learning more about any of these, contact us here. You can also check out some of these resources:
We recently spoke with Mark DeBlois and Rufus Clark, two of the Co-Founders and Managing Partners of Bunker Hill Capital, a private equity firm investing in entrepreneur and founder-owned lower middle market companies in North America. Bunker Hill has offices in Boston, MA and San Diego, CA.
The four partners at Bunker Hill have worked together for over 20 years as private equity investors with lower middle market companies. As lead investors, they actively work with portfolio companies leveraging their extensive board-level and strategic planning experience.
When I caught up with them on the journey of Bunker Hill Capital, it was refreshing to hear how, in a world consumed with change, nothing can quite replace years of dedicated experience, a focus on relationships, and a time-tested investment ethos.
Tell us about the founding of Bunker Hill Capital.
We were senior members of the buyout team at BancBoston Capital, one of the largest bank-affiliated investment companies in the US, and it became increasingly apparent that going it alone would allow us to control our own destiny. Having a private equity mindset is different from how a commercial bank approaches investing, and we wanted to manage the business without these inherent limitations. Also, being able to change our investment strategy and how we invested was just as important.
An example is our ability to work closely with a variety of value-added partners including operating professionals and strategy consultants. Our relationships with them are a cornerstone of how we invest, proactively create value, and build relationships across the marketplace. As part of establishing Bunker Hill Capital, we were able to develop relationships with a wide range of strategic partners that was not possible when part of a large institution.
So, we spun out to start our own firm, Bunker Hill Capital, just under two decades ago.
Since then, how has the market changed?
The transaction dynamics have changed with the growth in the alternative asset class. The amount of capital flowing into the asset class has increased dramatically as has the number of PE funds, pushing up multiples over time.
Our core market, the lower middle market, includes companies with revenues between $5 million and $100 million—of which there are approximately 360,000 in the United States today. Compare that to the next level up, where there are about 22,000 companies with revenue between $100 million and $500 million, so our opportunity pool is 16 times larger.
In our market, we can source deals either as one-off deals directly from owner-entrepreneurs as sellers, through intermediaries such as accountants and attorneys, or through limited auctions, where an investment bank brings together people they know who can close deals and who have years of experience in the lower middle market, such as ourselves.
So, it’s actually the market dynamics in this end of the lower middle market that have not changed as dramatically that allow us to continue to reap the benefits.
An area where we have seen change is increasing prices in each market segment. However, as much as they have all gone up, the relative delta between the lower and upper middle markets has remained constant. For example, hypothetically as the first PE owner we may pay between 6.5x and 7x on EBITDA for the companies we invest in (compared to 2003, which was 5-6x). We then sell these companies to strategic buyers or the next market level up—large PE funds that pay between 8x to 10x on EBITDA multiples. So when we sell our companies to these strategic buyers, we capitalize on this multiple arbitrage.
What differentiates Bunker Hill Capital?
Bunker Hill Capital is well-known in the lower middle market, having been in this market segment for over 20 years, which is very unusual.
We are unique in that we have the luxury of staying in the smaller end of the market. People tend to think bigger is better. We think we can have more impact strategically on these smaller companies over a shorter period of time, compared with the larger deals that are more like steamships: huge and take a lot longer to turn.
Our key criteria for buying companies is to be the first PE owner buying from founders and owner-entrepreneurs who either want to remain in the business or have identified their management team. This is 70 to 80 percent of our deals.
This is important because these founders are looking to crystalize the value of their sweat equity, and take some of their chips off the table for a variety of reasons. Finding a partner who will risk their own money to do this and take the company to the next level is key. The founder can then continue to enjoy the benefit of their minority capital stake, thereby continuing to increase their wealth by getting a “second bite of the apple.”
We do extensive strategy and infrastructure work at the companies we buy to allow them to scale. The larger funds, in the next level up, buy from folks like us as they can’t grow just organically; they need to grow through acquisition to get the kind of returns and exit multiples to satisfy their investors. Therefore, by definition, they must combine organic growth with acquisitions. And that’s where we come in.
How is Bunker Hill approaching the investment process to generate differentiated returns?
Early on from Fund I we refined our due diligence process, such as building relationships with our network of strategic partners. A lot of these refinements we did during Fund I, so the due diligence process we have now follows the same repeatable model. This has resulted in a time-tested methodology.
We believe the 20+ year evolution of our methodical investment process is world-class. Being a fiduciary to our limited partners, we are very hands-on in the businesses we invest in. We collaborate closely with our management teams and give them the tools they’ve never had before to better serve the business.
Post-close, we go through a 90- to 120-day strategic planning process to implement the findings from our detailed pre-sale due diligence and formalize the strategy into what we call a “Full Potential Roadmap.” This is coupled with a “Key Initiative Tracker,” which breaks down the Roadmap into an implementable plan, and is then tracked and monitored weekly and/or monthly with clear accountability and performance-based outcomes.
Finally, this plan is driven by the growth initiatives we are going after and how we want to scale the business’ revenue. But perhaps more rewarding is that after going through the process, most of the CEOs thank us for these invaluable tools that help them empower their own people, hold them accountable, and transform their business.
How is working with a Founder-Owned business unique?
Owner-entrepreneurs and founders can run the spectrum on experience and/or business sophistication, so identifying where along this spectrum the founder is and recognizing this is part of our due diligence process.
We place enormous emphasis on these founder relationships and if the chemistry is not quite right, we may decide not to proceed for the benefit of all parties. This is where the buck stops, especially if the owner is critical to the business.
Working with a wide variety of owners and CEOs is like working with any new person. We don’t delegate this relationship down to junior staff, as it is very personal at the managing partner level. You have to quickly figure out their strengths, growth opportunities, skills, and communication style, and we have to work with all of this while going through complex transactions – working through strategy, implementation, and everything else that goes along with the transaction.
Sometimes the owner is the CEO, and sometimes that’s not the case. The strongest CEOs are proactive and are on top of the Key Initiative Tracker. Some of the best CEOs we have worked with are self-aware enough to know where their highest value is in their role with the new company, including using the Key Initiative Tracker to mentor and track their direct reports, and then leading the charge on implementing these growth initiatives throughout the organization.
Can you talk about the role of ESG in Private Equity?:
ESG is a hot topic now. Most PE firms were doing a portion of this before it really got labeled. We were always doing environmental and social due diligence with potential investments.
Historically, we have intentionally looked at where the company could be more environmentally friendly and socially aware. Examples include increasing the recycling of waste materials, cutting down on energy consumption, and recruiting the most qualified candidates for roles.
Within our Key Initiative Tracker, we formalized this by putting in a group of ESG initiatives and being more explicit about it with our companies.
For example, we are being more proactive when we are sourcing overseas with a supplier code of conduct that includes detailed standards that our suppliers have to abide by.
On the social side, we have a strong bench of DEI candidates throughout our companies. DEI is built into our recruiting approach when hiring the most qualified person for the job.
For someone entering Private Equity in today’s landscape, what advice would you offer to them?
Find partners you can trust and work with. There are lots of ups and downs. You work hard and go through a lot— it can be very rewarding, but you need to have trusted partners over a long period of time.
You don’t know what you don’t know, and like everything else there is an evolution. There is no replacement for experience. It is complex enough doing what we do, and over the past couple of decades we have been able to cultivate relationships and refine our process along with the types of companies we invest in.
Also, don’t be afraid to surround yourself with smart people, not only inside the GP but also with your outside advisors. The relationships we have with our world-class executive network have been mutually beneficial. For example, our CEOs that are still assisting in our deals 20 years later is only something you can build over time. You can’t flip a switch and say, “I want that Day One.” It comes with being in the trenches together over a long period of time.
Interested in hearing what other PE experts have said in our interview series? Check them out here.
ACG InterGrowth 2022, known as the premier dealmaking conference, was conceptualized to build and strengthen relationships between private equity firms and investment banks. This annual conference allows PE industry leaders to gather and discuss key trends. Last week was filled with cybersecurity, DE&I, and supply chain thought leadership conversations, plus some Las Vegas style poolside networking.
As hundreds of private equity professionals and investment bankers filled the ARIA Resort & Casino from April 25-27, 2022, our team was able to re-connect with familiar faces as well as meet new ones.
“You could feel the eagerness to be back in person the moment you arrived. From founders to deal teams to business development professionals, the atmosphere was engulfed by ideation and excitement,” says Michael Mahan, BluWave Account Management Director.
Here are some of our team’s top takeaways from our largest conference back in person:
Quality Deal Flow Challenges
PE firms broadly shared that activity is slower compared to last year at this time. Our data confirms this as due diligence projects have declined YoY, from 28% of the BluWave Activity Index in Q1 2021 to now 22% in Q1 2022. While overall deal flows are beginning to increase, deal teams expressed that quality deals are hard to come by.
Lights, Deals, Action!
While ‘digital transformation’ remains a top buzzword, we know that top-performing, proactive PE firms and their portfolio companies are looking to transform their businesses, not just optimize them. Industries such as manufacturing and supply chain are dependent on new technologies to scale growth and meet the industry demand post-pandemic.
Market Differentiation
Building brand equity to differentiate your firm is important in today’s crowded landscape. With less quality deals in the market, it is mission critical for firms to remain top of mind with investment bankers. PE firms are finding creative ways to do this through utilizing specialized resources that can help them with their internal branding, & more.
ACG InterGrowth 2022 exceeded our expectations, and it was great to have the opportunity to connect with so many individuals in person. If you were unable to attend the conference, but are interested in connecting with us, contact us here.
BluWave Account Manager Morgan Murphy concludes, “This year’s conference was instrumental in continuing to build our relationships with PE firms face-to-face. Until next year!”
Every quarter we gather Operating Executives in PE to discuss current industry topics and to offer peers the chance to gather, share information, and decompress with one another. In our most recent event, we gathered to discuss optimal operating team structure, how firms are tackling ESG, as well as GTM and growth strategies.
These forums are for PE Operating Executives only and follow Chatham House Rules, so listed below are high-level takeaways only. Are you in private equity and interested in joining fellow Operating Executives during our next Operating Partners’ Forum? RSVP for the August 23rd forum.
Optimal Ops Team Structure: Every ops team continues to look slightly different—varying between hiring full-time functional/industry experts and/or “athletes”/generalists. Generalists can be dropped into any portco situation, analyze it, and pull in the right third parties when needed. On the other hand, specialists can insource the work by adding niche expertise and credibility. When making the decision between a generalist and a specialist, consider the ramp-up cycle and strategic value. If the project has a high strategic value, many firms choose to use specialists and keep the work in-house. General rule: Have enough capability (in-house or outsourced) to own and execute the value creation plan.
ESG: Even without a mandate, ESG is coming up in more and more conversations and firms are leaning into creating a plan. These plans can look like a lot of different things, but a simple first step is to gauge where you are on various ESG factors at that given moment, and then start to measure (and report) progress. Pick your shots, and don’t feel compelled to tackle every aspect under the ESG umbrella. On the DEI front, some firms have developed a baseline to measure progress on diversity in recruiting, board composition, internal fund composition, and recruiter candidate presentation. Some firms, such as Sumeru, have developed a GP-level DEI strategy by recruiting candidates from underrepresented backgrounds and creating mentorship/fellowship programs.
GTM/Growth Strategy: Go to market strategy is one of the biggest value creation levers a PE firm can pull. In the “new now,” industries and supply chains are meaningfully changing their pricing structures. For many, pricing has become a top initiative at every portco in the portfolio. The top tips in this category were: 1) decrease portcos’ reliance on a single supply contributor in case that person leaves; 2) over-assign sales quotas, knowing you will likely have more attrition than historically; 3) lean more into digital channels to stay relevant.
We thoroughly enjoyed getting to gather with PE Operating Executives to discuss these current hot topics. If we can be of help sourcing needed specialists, developing your ESG strategy, or connecting you with pricing expertise, please contact us.
Interested in learning more about BluWave? Check out our Introduction to BluWave video to learn more about us and how we can help you.
BluWave works with over 500 PE funds from around the globe as well as their portfolio companies and proactive independent companies, connecting them with pre-vetted, best-in-class, third-party service providers across a variety of resource and functional areas. From information technology and manufacturing to healthcare, consumer goods, and beyond, our clients are expert business builders. In other words, they have their heads in the game and their hands on the pulse of news and insights you can use.
Check out the latest, curated collection of reports, insights, and musings from a handful of our PE fund clients on everything from ESG to cybersecurity, and inflation to sales.
Advent’s Managing Director, Tricia Glynn, talks with the chair of Goldman Sachs’ Investment Banking division about a wide array of topics including investing through an ESG lens; trends in the retail, consumer, and leisure sector; and her economic outlook for 2022.
The COVID-19 pandemic accelerated many businesses’ plans to move more and more digital. With this change comes an increased risk in terms of cybersecurity. With a cyberattack estimated to occur every 39 seconds, Blackstone shares insight into how their portco Vectra has developed an innovative solution to this problem.
Scot Duncan, MiddleGround co-founding partner, speaks on a panel covering sustainable profitability in manufacturing companies. He shares ways MiddleGround’s portfolio companies are increasing revenue amidst an environment of supply chain challenges and labor shortages.
ParkerGale’s Paul Stansik is joined by two guests to talk about prospecting and how to get growth right. They share their varying opinions on how to prospect well, the evolving role of the BDR/SDR, and more.
As part of an ongoing series, we’re sharing real-time trending topics we are hearing from our 500+ PE fund clients. In our most recent installment, our consulting manager, Scott Bellinger, talks about why we have seen an increase in go-to-market & growth strategy needs and how we are supporting clients with those. He shares that growth strategy is continuously increasing, with GTM being the third most used Value Creation use case in 2021, according to the BluWave Value Creation Index.
One of the most common ways we are helping clients with growth strategy needs is by connecting PE funds and their portfolio companies to senior advisors and consultants that can help them expand their reach outside of their current established market.
You can read another example of how we’ve helped a client with a go-to-market need in this case study.
Learn more in the below video.
Do you need to get connected to a GTM or growth strategy resource? Be sure to click the “Start a Project” button above, or contact us here and we would be happy to get started in assisting you.
BluWave works with over 500 PE funds from around the globe as well as their portfolio companies and proactive independent companies, connecting them with pre-vetted, best-in-class, third-party service providers across a variety of resource and functional areas. From information technology and manufacturing to healthcare, consumer goods, and beyond, our clients are expert business builders. In other words, they have their heads in the game and their hands on the pulse of news and insights you can use.
Check out the latest, curated collection of reports, insights, and musings from a handful of our PE fund clients on everything from community building across your portfolio, expected surprises for 2022, operational due diligence, and go-to-market strategies.
On the latest episode of The Private Equity Funcast, Jim, Cici, and Jimmy discuss their approach to building community within their portfolio. They share what has worked and what hasn’t for them, why community building is beneficial, and how they’ve seen their efforts have a positive impact across the companies within their portfolio.
Byron Wien and Joe Zidle share the unexpected, yet probable events that they think could shape the political, economic, and financial landscape in 2022. Some of the surprises they expect include persistent inflation becoming a dominant theme, group meetings and conventions returning to pre-pandemic levels by the end of the year, and ESG evolving beyond corporate policy statements including government-enforced regulatory standards.
Susan Clark, Managing Director and Head of Technology Value Creation at Sun Capital, joins several other private equity leaders on a Privcap Media podcast on best practices for operational due diligence ahead of PE investments. Susan shares what she looks for in ops diligence and how it helps create a go-forward plan post-close.
TCV’s Amol speaks with Trulioo’s CEO, Steve Munford, about how Trulioo’s customer base is integral to how they prioritize go-to-market channels on the Growth Journeys podcast. In addition to discussing GTM strategies, they also discuss tips and best practices for preserving culture across a rapidly growing multinational organization.
If you are in need of resources that can proactively help you with ESG, provide the specialized operational diligence you need, or help with your GTM and growth strategies, we can quickly connect you to the PE-grade, pre-vetted, exact-fit ones you need. Give us a shout.
BluWave works with over 500 PE funds from around the globe, connecting them with pre-vetted, best-in-class, third-party service providers across a variety of resource and functional areas. From information technology and manufacturing to healthcare, consumer goods, and beyond, our clients are expert business builders. In other words, they have their heads in the game and their hands on the pulse of news you can use.
Check out the latest, curated collection of reports, insights, and musings from a handful of our PE fund clients on everything from differentiated investments in 2022 to The Great Resignation, cloud security, and sales enablement.
As a wrap-up to 2021, Joe Zidle from Blackstone reflects on differentiated investment opportunities in the coming year. He shares why certain global economies will weather coming headwinds better than others, why he predicts that the ability to generate alpha will increasingly drive outperformance in the US, and more.
In this episode of the Private Equity Funcast, Jimmy discusses the macro trends that are driving The Great Resignation and how it is specifically impacting the middle market with Tim Schumm of Lucas James Talent Partners. They share why the middle market may be feeling the impacts of this phenomenon more acutely and tactics these businesses can implement in order to ensure they have the talent they need.
Permira talks about one of their recent investments in the cloud security space and explains why enterprise workloads are increasingly moving to the cloud infrastructure. They also explain the concept of containers in the cloud and how that is forcing businesses to rethink their cybersecurity tools.
Katja and Kunal from TCV share their key takeaways from a recent episode of the Growth Hacks podcast, where Scott Santucci shared why the main lesson he advises his clients to do is simplify their sales processes. They talk through the value of the commercial ratio, tips for aligning organizational economic value with the needs of your customer base, and more.
Every year, the private equity industryfocuses a tremendous amount of energy on add-ons as a core expansion strategy to build bigger, better, and more valuable companies. We saw a particularly strong amount of activity last year during the pandemic as competing businesses saw more value being more together than apart. This trend has continued into 2021, and as such we’ve seen an uptick in requests for specialized groups and individuals with deep experience in merger integration.
According to our Intelligent Network merger integration experts- who have focused their careers on making merger integrations go well the first time- there are several key elements that allow merger integrations to flourish. If you’re considering an acquisition or add-on as part of your long-term plan, keep these elements in mind before you pull the trigger.
ELEMENT #1 – Keep an open mind
Keeping an open mind during the initial integration process helps eliminate bias and allows the process to move more quickly, while also avoiding employee and customer attrition. You’re acquiring the target for a reason. You’ll no doubt find a wealth of perspectives in your target that will make the combination better for all.
ELEMENT #2 – Know the investment thesis
If you have a clear understanding of the investment thesis and how the integration fits into the broader picture then it will be much easier to develop a roadmap and, as Stephen Covey aptly asserts: “begin with the end in mind.”
ELEMENT #3 –Understand who has the best system in place
By clearly defining a business capabilities chart upfront, then doing an assessment of which organizations have the best capabilities in place, everyone benefits. Remind yourself that for 1 + 1 to be greater than 2, you need to seamlessly integrate the best of both.
ELEMENT #4 – Prioritize agility and flexibility
As Mike Tyson famously once said, “everyone has a plan until they get punched in the mouth.” Once you get started, you’ll learn new information and will need to adapt your plan. If you can set the expectation that agility and flexibility are key components of an integration, this gives people permission to let go of pre-conceptions, embrace change quickly, and smoothly transition to the best version of the “new normal” with speed and excellence.
ELEMENT #5 – Beware of overloading IT
During a typical integration period, the IT department tends to absorb a very heavy load of the “asks”—because of technology’s integral role in the process. Make sure there is a system in place that enables communication between integration leadership and IT to avoid the mistake of overloading them.
ELEMENT #6 – Communicate clearly, early, and often to employees
One of the biggest mistakes made is that acquirors try to let things settle for a while before they begin integration activities. During any major shift of change, people are often fearful of what this means for their personal and professional futures. By offering insight into what is happening immediately after you close your transactionand sharing what will happen, even if it’s not what they want to hear, employees can embrace an integration with less trepidation. Be sure to promptlyfollow your communications with aligned actions.
ELEMENT #7 – Lead by example
This should probably be #1 (and likely goes without saying), but leadership is ultimately responsible for the success or failure of an integration. Acquisitions have a unique ability to either make or break a company. If you’re in a leadership role, don’t pass off important steps of the process to lower-level managers, particularly with more nuanced or difficult changes. Lead by example and show that you have bought into the task at hand by holding others and yourself accountable for the outcomes. Make acquisition integration part of your leadership meetings and make sure the buck stops with a key leader in your organization who cancatalyze buy-in and action.
Check out the case studies on how we’ve helped clients connect with the merger integration experts that are right for them here and here. And as always, if you have an immediate need we can assist with, contact us and one of our team members will be with you immediately.
Even the most talented athletes never reach their full potential without great coaches. Beyond the ability to see elements of their players’ game that need to be improved or reinforced, effective coaches can motivate players by setting goals, holding them accountable, and providing the right resources for growth and development. While players are responsible for their performance on the court or field, coaches can help them play better than they ever thought possible.
As the CEO of a platform that helps connect private equity (PE) firms with third-party resources, I’ve observed that this isn’t unlike the relationship between these two entities. Just as coaches provide plays, strategies, and training, PE firms give companies the tools they need to improve their products and services, ensure their operations are as efficient as possible, and increase their productivity. To take full advantage of the coaching PE firms can provide, companies have to know who they are and where to find them as well as how to build healthy relationships with them.
What PE Firms Can Bring To The Table
Companies often misconstrue the role of private equity firms. Instead of viewing them as partners, they often regard them more narrowly as sources of capital. It’s long past time to abandon the reductionistic perception of relationships between PE firms and their portfolio companies as strictly transactional. This view maintains that PE firms pump cash into companies, cut costs wherever they can and sell those companies as quickly as possible. Beyond the fact that the median holding period in 2019 for PE firms was 4.5 years, PE firms report that they’re more interested in building strong companies than trying to make overnight profits.
Most PE professionals have worked with hundreds, if not thousands, of companies and have previously been through many of the trials that companies are otherwise experiencing for the first time. Their experiences help them advise which strategies are most likely to be successful and which resources can be used to execute plans most effectively.
Like coaches, PE funds conduct rigorous assessments of companies’ performance on fundamental metrics (such as market share, customer churn, top-line growth, customer concentration, and profit margins), provide objective appraisals of what’s working and what isn’t, and allow access to the right resources necessary to drive accelerated improvements.
The Process Of Choosing Your Private Equity Coach
The global economy is becoming more dynamic, skills-based, and competitive every day. A recent World Economic Forum report explains that the rapid pace of technological change is leading to major shifts in the types of workers companies employ, while a significant majority of the companies say they’re needing and investing in specialized expertise.
PE firms aren’t just a source of financial support; they also offer just-in-time access to the specialized expertise that companies need to navigate the evolving global economy, especially at a time when we’re recovering from the most significant downturn in years.
In order to get the right fit when it comes to choosing a PE fund partner, you need to do some work. Look for one that is aligned with your industry, the size of your company, and your culture. You should probe the firm on its ability to add value beyond just cutting the check. The best PE funds will have countless examples of how they helped others in similar situations.
If you’d like to take the traditional route to find the right firm, start with your own network. Talk to your acquaintances who have experience working with PE funds and ask for referrals. Next, you could seek out trusted investment bankers who regularly connect business owners with best-in-class PE fund investors in your end market. Lastly, keep in mind that there are networking tools like Axial that can make the process of connecting with PE investors easier. (Full disclosure: My company offers networking solutions for different applications in due diligence and value creation.) Deloitte reports that talent networks now account for billions of dollars in economic activity and hundreds of millions of hires around the world.
Making The Most Of The Relationship
While a private equity coach can have a huge impact, players ultimately have to take full responsibility. The same applies to companies that work with PE funds or advisors of any kind. They should be willing to confront problems honestly, put their coaches’ advice into practice, address failures and celebrate successes. It’s essential to establish norms of transparency and accountability early on in these relationships, and this begins with the alignment of goals and how to achieve them.
For example, what are your definitions of success? Companies and their PE coaches should ask this question right at the outset and arrive at an answer that makes sense to everyone. After deciding what success looks like, it’s crucial to determine which metrics will measure performance. With the scorecard in place, the next step is identifying the resources and capabilities companies need to achieve their goals.
At every stage of this process, open communication and collaboration are key. Both coaches and players need to feel comfortable asking tough questions and openly sharing their thoughts. When a company and its Private Equity coach listens, holds each other accountable and moves forward with a foundation of trust, shared goals, and collaboration, only then can they discover that they’re capable of far more than they imagined.
What makes a what are the elements of value for a company?
Its people? Definitely.
Its products? Absolutely.
Its patents? Very likely.
But these are the obvious, high-level answers for anyone with a rudimentary understanding of how business (and the economy) works. But it’s the more nuanced elements of value that can make or break a company, particularly during vulnerable times—like an economic downturn or a barrage of new market entrants.
Whether your company is investor-backed, customer-supported, or a combination of both, investors have a significant amount of knowledge about the core elements of value for any business beyond the usual suspects. In part, this is because they are in the “business of growth”—and growth only happens when the products and services being sold have value and can hold value in their specific market.
In a recent CEOWORLD Magazine article, our founder and CEO Sean Mooney offered eight core elements of value that any company can benefit from when prioritized, based on his 20-plus years of experience in private equity. How does your company measure up?
Based on his experience, both from the investor and company founder side, he notes: “By taking the perspective of outside investors, business leaders will identify more opportunities, reduce the risk profile of their company, and drive accelerated value creation over time.”
