PE Firms Archives - Page 46 of 46

3 Ways to Increase Your Company’s Value

June 6, 2018 Sean Mooney

After nearly 20 years in private equity, I appreciate how hard it is to build and grow businesses in a constrained environment. Nothing is easy, but most things are possible with the right people and resources.

Top private equity funds regularly ask us about ideas to help drive growth and reduce costs. Here are a few growth, organizational development, and cost reduction strategies that can be applied to build your business and drive value creation:

Reach 1,000s of customers at a click of a button: Digital marketing is the most underused tool in the middle market: every business should be doing at least the basics (particularly in underutilized B2B markets). This starts with good data (you should think of this as a business asset), requires market segmented content, and systems capabilities. It’s really hard, and expensive, to internally be good across SEO, paid search, content, email, PPC ads, etc. You should outsource this to a middle market agency who will do this better and at lower cost than you can. Committed digital marketing programs can lift revenues by more than 20%.

Rent “A” Players: Sometimes it’s better to rent 10% of a bunch of A’s rather than own 100% of the B or C you can afford in your budget: the future of work is now (just ask some of the best younger workforce members who won’t work full time). There are great variable resources that you can use across the functional areas of your organization to more optimally inform strategies and execute on your plans. Use them. Plus, if it is a one-time project, you often can get an add-back for it, enabling you to present stronger numbers when it comes time to sell your business.

Your costs are rising, you should be fighting it more: In the current world climate, all sorts of input costs are on the rise, from metal to plastics to fuel. Most companies (including very large ones), don’t have the internal expertise or the free resources to understand and aggressively combat today’s volatility. Bring in a specialized procurement group that lives and breathes in these markets to reduce costs, diversify supply chains, and/or hedge risks. While you’re at it, go after your indirect spend. If you’re not ready for a procurement group, at the very least you should be using plug and play Group Purchasing Organizations (GPOs). Expect some push back as the savings can be embarrassing and/or preemptively tap into rainy day savings buckets. However, when you apply a valuation multiple to the savings you’ll achieve, these tools are no-brainers.

Finding the superior groups isn’t easy. BluWave seamlessly connects you with the best vetted and private equity tested practitioners that specialize in your areas of need and fit your budget. We also make it remarkably easy on you: we don’t charge you anything to use our service.

Start talking with us about your needs today. Help is a call or email away.

PRESS: BluWave and Sean Mooney in Mergers & Acquisitions

May 17, 2018 Sean Mooney

Mergers & Acquisitions recently published an article titled “From fund administrators to VDRs, dozens of firms help M&A pros compete” that features BluWave and BluWave’s CEO, Sean Mooney.

From Mergers & Acquisitions:

“Think Gartner Inc. meets Angie’s List and there lies BluWave. The idea for BluWave grew over a 20-year span, while Sean Mooney was working in a private equity firm and started to see a void in the market as the industry became increasingly competitive.”

How to Run Your PE Fund Like a Business

May 8, 2018 Sean Mooney

There are currently more than 4,000 private equity funds competing for limited opportunities. Economics 101 is hitting the PE industry hard: since the demand for investment opportunities has been growing and the actual number of opportunities has stayed consistent over time, PE investors are facing an uphill battle. To succeed in a crowded field, PE funds must now run their own organizations like their portfolio companies.

Private equity funds are in the business of taking enterprises operating below full potential, growing their value, and selling them at a profit. And while PE investors focus on improving the operations and value of their portfolio companies, they often overlook the management of their own fund. Don’t let the cobbler’s kids have no shoes. PE investors need to learn to look at their funds the way they look at their portfolio companies, with an eye for increasing opportunities and optimizing operational effectiveness across the fund’s lifecycle.

The Business of Private Equity
Much like target businesses, PE funds typically have a Front of the House (deal and human capital origination), Operating Engines (assessing investment opportunities and post-closing value creation), and Back of the House (fund administration and fund operations). The business of private equity must increasingly be more business-like to succeed in today’s increasingly competitive environment. The good news is that most PE funds have tremendous opportunities to improve how they operate and differentiate from the pack. In this post, we focus on the low hanging fruit within your Front of the House and Operating Engine.

Front of the House

Knowing How to Market your PE Fund
Gone are the days of investment opportunities finding you simply because you have capital to invest. There are too many funds competing for the same deals. One of the hardest jobs for investment bankers now is knowing where to cut the deck for a sale process. Branding and marketing efforts are essential in the competitive PE world. PE funds must use marketing to source new deals, raise funds from investors, and recruit new talent for their internal needs and to their portfolio companies. The same marketing tools that are applied to portfolio companies can and should be applied to PE funds.

PE firm members should take the time to determine and hone what differentiates their fund from the competition. This brand positioning exercise requires thorough research into the market, as well as feedback from firm members, limited partners, and portfolio company leaders. It’s often beneficial for PE funds to work with third-party marketing experts who will take an unbiased approach to their research and can help develop effective brand messaging.

Once you have your brand messaging figured out, your fund should be using digital marketing to raise and regularly reinforce awareness. It amazes us that virtually no funds are using these tools other than episodic emails tied to new deals. The good news is that early adopters have a green field opportunity to differentiate. If interested, we know excellent agencies that will be great for both you and your portfolio companies. And when you’re ready to execute, we can also point you to the best technology tools like CRM, implementation groups, and data providers to get the job done.

Using Human Capital Assessment Tools
Many PE funds are already using human capital assessment tools for their target acquisitions. Far too few are using these tools to support their own teams.

Many, if not most, PE professionals (including me) came from the investment banking ranks. I think most will agree that these institutions have many strengths; however, training their professionals to lead and manage highly effective teams is not always one of them. The school of hard knocks gets results for sure, but a lot of china tends to be needlessly broken in the meantime with morale and performance suffering as a result.

Human capital assessment tools can benefit PE funds by identifying opportunities for structural improvements in the organization, as well as people who have the right skills to positively affect change and fit within your existing group dynamic. PE funds can also use the results of their HR intelligence initiatives in their marketing and recruiting efforts by pointing to standout results they’ve created. We have a particularly relevant group that can help understand your team dynamics, improve group cohesion, and guide future hires. Their method helps the Israeli special forces do the same and can be just as helpful to you (as well as your portfolio companies).

Back of the House

Tuning up your operational engine
Many PEGs are now adding operational resources to the internal teams, ranging from operating partners, to project support QBs, to full blown portfolio support groups.

We regularly see a common flaw in the private equity operating support model. In this model, the private equity operating professionals usually come from senior level industry positions in varying end markets where they bring true executive and operating excellence experience. In their prior capacities as senior executives, they led highly functional teams to execute on their vision and related strategy. However, when they join the private equity fund as an operator, they often find themselves in an army of one, where they formulate the vision, often have to single handedly determine the strategy, and then typically execute it themselves while navigating varying degrees of pushback from the portfolio companies.

Your operating professionals should be acting like they did before joining as an operating executive: assess the situation, set the vision and strategy, and support / manage the execution (without doing the execution). Very few firms can afford however to build their own full blown internal AT Kearney (nor should they). The good news is that there is a world of excellent third-party resources that your operating executives can manage in conjunction with your portfolio company leaders to execute on identified opportunities. When chosen and managed correctly, you’ll get better outcomes, the cost won’t be borne by your management company and is variable at the portfolio company level (and often add-backable at sale time), and operating partners will have significantly more leverage to impact your broader portfolio versus getting bogged down on individual projects.

Learning to Outsource
Highly-trained PE firm members shouldn’t be wasting hours Googling the solutions to industry-specific problems their portcos are facing—going down these rabbit holes can cause firms to lose thousands of dollars per hour per professional in opportunity costs (run the math – it’s not for the faint of heart, though). PE firms must become more comfortable outsourcing projects to consulting professionals with niche skills and industry expertise so that their teams can focus on their core competencies.

BluWave can quickly and efficiently connect you with vetted, PE-tested service providers who can tackle the projects your internal teams shouldn’t. Our invitation-only expert network includes specialized consultants who can help assess opportunities, build value, and complete projects with more speed and certainty—for PE firms’ internal teams or their portfolio companies.

Partnering with BluWave is the first step towards running your PE firm more like a business. Contact us today to learn more about how we can create value for your firm.

How You Should Be Selecting the Right Service Providers

April 10, 2018 Sean Mooney

When used correctly, service providers can meaningfully improve the efficiency and productivity of your business and can dramatically help increase value. In a perfect world, your service providers work autonomously and efficiently to make universal improvements to your business.

But that’s not often the case. Service providers not only need the right capabilities, but also ongoing guidance to perform their tasks to maximum effect.

When done well, choosing and using the right service provider can profoundly impact due diligence and value creation.

Unfortunately, you’ve probably been doing it wrong.

We don’t mean it as an insult – it’s a common occurrence. There are so many service providers who simply aren’t the right fit for improving your business and increasing its value. Private equity (PE) funds, their portfolio companies, and independent companies need to critically examine service providers before hiring them, then carefully manage them to meet with success.

But how do you take that first step toward finding and choosing the right service provider? You learn about the problems or opportunities in the process, scope your needs, then purposefully move forward with the solutions.

The Fragmented and Fluid World of Service Providers
There are two ubiquitous problems when searching for and using service providers:

It’s hard to know who is really good for the task at hand – No matter the industry, finding and vetting a qualified service provider is exponentially harder than finding just any service provider, and it’s going to take some time to get it right.
Once you find out who can deliver, they change – Even the most well-qualified and experienced service provider is vulnerable to change; they may move upmarket, ask for higher fees, get acquired and clean house, or sell out of capacity right when you need them.

The service provider ecosystem is a complex web. Within this web are great groups that can help you accelerate business growth and development. But to achieve your goals, you have to accept no less than a grade-A fit for your business.

Calibrating Service Providers Around Capabilities
There are three essential baseline questions to ask about service providers when assessing:

Do they do what I need? (Capability)
Have they worked in this industry before? (Expertise)
Can I afford them? (Budget)

If the answer to any of those questions is “no,” then you haven’t found the right fit. It’s essential to make sure the answer is “yes” before proceeding.

Capability
Dig around to find out if the service provider has done and has success with doing the job for which you plan to hire them – and be specific. Learn if they have handled tasks that match or closely match those that you expect them to handle, and get two sides of the story; ask them about their experience, and learn about the real-world result of that experience by speaking with their past and current customers of your choosing.

Expertise
It may not seem terribly important initially, but industry expertise helps your service provider skip many steps in the learning process (and avoids the expensive proposition of a service provider having to learn while they’re on the clock for you). The ability to tailor decision-making to the needs of a particular industry is invaluable, and you’ll need both the set of skills necessary to do so and the time and resources it would have taken to gain those skills.

Budget
Calibrate your budget with your choice of service provider. There are different service providers that are capable of executing well at different price points. Beware of pushing a service provider at a higher price point to do work much below their typical rates as you’ll likely get sub-par focus and attention. Instead, choose the best in class provider within your price range. While there are of course tradeoffs that will be made between such price points, with a reasonable budget, you should be able to get and should expect an excellent outcome.

Getting a great result starts with answering “yes” to all 3 baseline questions around Capability, Expertise, and Budget. Accept no substitutes.

Managing Your Service Providers
Service providers need real-time management if you want to get a great return on your investment. Try these tips for getting the most out of your service provider

Create a system of consequences – Holding providers accountable means making sure they know what is expected of them and that their actions have a direct effect on your and their companies. You should track how they are performing over time, provide direct feedback, and only work with groups that consistently serve you and your peers well over time.
Manage them like a full-time equivalent (FTE) – It’s okay to check up on your service providers to ensure they are working diligently. Maintain reporting lines, communicate regularly, and treat them with mutual respect as you would a full-time employee.
Work as if they are part of the same company – Consider your outsourced service provider as another hire or set of hires that are in charge of a selection of your business’ process Keep them informed on issues they need to know about and include them as part of your company work ethic and culture.

When you trust a service provider, they should also be able to trust you to help guide them toward the tasks necessary to meet your goals. Related to guidance, there are two common mistakes that many PE funds, portfolio companies, and independent companies make when choosing and working with service providers:

Broad mandates – If you’re not specific about what you want, service providers have to guess both your goals and how you would like tasks to be executed, which can lead to quite a bit of wasted time and money.
Poor management – We can’t say this enough; service providers need to be actively managed as if they were employees of the company to truly shine

Growth and development is never a guarantee, but by carefully selecting your service providers, giving clear guidance, and holding them accountable, you will drive value creation with more speed and certainty.

Sound like a lot of work? We think so, too –we’re uniquely equipped and excited to handle much of this for you. BluWave team members utilize our extensive PE-tested network of comprehensively qualified service providers to analyze and help select the perfect fit for growing your companies. We then hold them accountable for delivering excellent results for all of our private equity fund, portfolio company, and independent company customers. Contact us today for help with finding the best fit for your next service provider needs.