Function: CEOs
What Is The Karma School of Business?
In the Know: Positioning for Growth in a Recession
We’re sharing real-time trending topics we are hearing from our 500+ PE firm clients as we combat ongoing recessionary and inflationary pressures. One of our Private Equity Strategic Account Executives, Cydney Dicken, talks about why and how leading PE firms are taking action to increase their portfolio’s equity value during these uncertain times.
Learn more about what PE firms are doing as they prepare to run towards the storm by watching the video below.
Interested in addressing competitive opportunities, optimizing profitability, or recruiting and retaining the right talent? Contact us here. You can also learn more about the specific ways we drive value for PE firms by connecting them to the exact-fit resources they need by reading our case studies.
Activating AI: Empowering Your Business for Success
In The Know: Executive Search
As part of an ongoing series, we’re sharing real-time trending topics we are hearing from our 500+ PE firm clients. In our most recent installment, we discuss why leading PE firms are choosing to engage specialized executive search firms over larger generalist recruiting firms.
Learn more by watching the video below.
Interested in connecting with a specialized recruiter or any other type of third party? Contact us here. You can also learn more about the specific ways we drive value for PE firms by connecting them to the exact-fit resources they need by reading our case studies.
In The Know: Interim Executives
As part of an ongoing series, we’re sharing real-time trending topics we are hearing from our 500+ PE firm clients. In our most recent installment, one of our Managing Consultants, Keenan Kolinsky, talks about one of the ways private equity firms are responding to The Great Resignation – Interim Executives. He shares why the need for interim executives is rising in private equity, how they can be used, and why they are beneficial especially to PE firms.
Interested in learning more about interim executives, how our clients have utilized them, and how we help? Check out our Interim Executives Hub to find case studies, scorecards, and more.
You can also learn more from Keenan in the video below.
Interested in connecting with an interim executive? Contact us here or click the “start a project” button above. We would be happy to promptly begin assisting you.
In The Know: Combatting Pricing Woes
As part of an ongoing series, we’re sharing real-time trending topics we are hearing from our 500+ PE firm clients. In our most recent installment, one of our Private Equity Consultants, Ryan Perkins, talks about the significant upswing COVID caused in the price of inputs. He shares two approaches companies can take in order to solve for this challenge, the negative impacts of each approach, and how BluWave can help in these scenarios.
Ryan gives an example of how we recently helped a high volume CPG business update their pricing across their product set, stay competitive with their eCommerce counterparts, and grow margins across their portfolio.
You can read another example of how we’ve helped a client with pricing strategy in this case study.
Learn more in the below video.
Do you need to get connected to a pricing analysis consultant or any other third-party 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.
In The Know: The Need for Go-To-Market Resources
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.
Common Mistakes to Avoid When Preparing A Company for Sale
After a nearly 20-year career in private equity, I’ve learned to appreciate that it takes just as much work to effectively sell a company as it does to excellently buy a company. It’s also easy to slip up or not pay enough attention to vital steps that could profoundly change the final price upon sale.
Sellers make a number of common mistakes during sale processes, including a lack of advance preparation, not knowing key questions about themselves, and not appropriately resourcing the business to concurrently run operations and support a sale process. Each of these mistakes causes sellers to lose credibility and slow down their process, which, in turn, increases real and perceived risk, and inevitably kills value.
To help get better outcomes, here are the three most common mistakes we see made when selling your business and how to fix them:
Lack of Preparation
As a private equity investor, we made it our business to optimize the sale process. We would talk virtually every month about the right time to sell various businesses. When we finally decided it was the right time to sell, we, of course, wanted to be in the market within six weeks of our decision. Even with professional sellers of businesses like PE investors, this decision is often followed by all sorts of scrambling by investors, portfolio company teams, investment bankers, lawyers, and related support professionals to get ready for sale. For family-held or entrepreneurially-held businesses with fewer resources and less experience selling companies, this process is multiple times more chaotic.
Don’t try to squeeze months of work into six weeks: preparing for sale should start well in advance of the sale process. Taking some time in advance will enable you to run an aggressive process while also effectively running your business at the same time.
We recently held a management forum for a top private equity find and their managers, during which we discussed best practices for planning for sale. The key takeaway was preparing for sale should start years in advance, ideally the day the first wire from investors clears, so you can hit the market at any moment when the time is right.
Not knowing yourself before you’re asked
Time and time again on the buyside, I’ve asked fundamental questions that should have been known by the sellers, but weren’t. When we asked these questions, the process had to slow down as their team hustled to find the answers. These slow-downs give everyone in the process time to rethink assumptions and value.
Make sure you know the following key items before you start an M&A process because you’ll most likely be asked these right at the time you can least afford to pause your process:
- The size and growth rate of your direct markets
- Your company’s market share in their addressable markets and how it compares to competitors
- Volume, revenue, and profitability by customer and product over a trailing 3-year period
Once you know these elements, incorporate them into a detailed financial model that projects your performance over the next five years (make sure you also have monthly projections for the next two years). If you do this, you’ll build credibility with buyers and disarm much of the skepticism that naturally occurs during sales processes.
Also, try your best to predict what buyers will be asking during the sale process. Have open conversations with your investors, executives, and investment bankers to understand your strengths and weaknesses. Save yourself from having to scramble to produce appropriate reports and information in the heat of the sale process. Having a general idea of what buyers are looking for and preemptively having answers to those questions, disseminating the information to those who need to know, and confirming overall readiness will ensure that buyers feel confident and comfortable when meeting with you and your team.
Truly best-in-class companies bring in third parties to pre-opine on the state and opportunities of the business. Spend a little money on pre-due diligence, including sell-side quality of earnings reports, tax diligence, market studies, and IT. The cost is minor as it compares the value of the company, and these third-party stamps of approval from credible advisors will give your buyers confidence that the company is what it is and not see (or go looking for) ghosts during the sprint to the finish line.
Under-Resourcing with Interim Staff
The single biggest mistake I saw time and again during my private equity career was understaffing the sale process. It’s nearly impossible to both aggressively run a sale process and proactively run your company.
Most sellers’ intuition is to put the bulk of the workload on their investment bankers’ shoulders. Your investment bankers can help, but you are not paying them to be your accountants, lawyers, market strategists, and data entry specialists. You hire top investment bankers to intimately know the buyers, appropriately frame the opportunity, and manage a process to optimize valuations. Don’t distract them by getting them bogged down in the weeds. Let them focus on the job you hired them for and they’ll deliver outstanding results.
Every business undergoing a sale process should bring in some level of interim staff (ranging from interim controllers to interim CFOs) to either help with the production of analyses and data requests or help manage day-to-day operations. This is a relatively small expense compared to the sums that will be gained by running a fast and credible process. If you don’t resource appropriately, something usually has to give: either your sale process, your operating results, or both.
We work daily to help top private equity firms, and their portfolio companies and proactively-managed independent companies more effectively assess opportunities and build value. It’s hard to know who is good: we make it our business to be the expert of experts.
Find out how we can help you during due diligence, value creation, or the sale process!
Video: Dealing With Service Providers at Capacity
As the world begins to rapidly reopen from the pandemic, businesses have begun to run full steam ahead to catch up for lost time. This massive acceleration in business has left many go-to service providers in the PE industry at capacity due to the sudden surge in demand, leaving many firms wondering where to go next.
In situations like this, hundreds of the leading PE firms have come flocking to us, knowing that we can provide them with alternative providers through our extensive Intelligent Network.
Our Intelligent Network boasts the characteristics of both having a deep bench of PE-grade service providers and single shingle consultants.
In times like this, our broad list of resource partners allows us to keep a pulse on different providers’ availability, leaving firms with more time to focus on other initiatives while we determine what providers are available for them.
Additionally, our PE-grade single shingle providers empower our clients to find the same quality services they are accustomed to with their go-to providers, but for a much better value.
In the video below, former PE Partner and Bluwave Founder and CEO, Sean Mooney, shares his top three tips on what to do when your go-to resources are at capacity.
If we can help you connect with alternative providers during this capacity shortage, or help you with any other need, please contact us at info@bluwave.net and we will be happy to connect with you right away.
How to Build A Resilient Company in Changing Times
Do you have a resilient company? Does it navigate shifting tides easily, or do your leaders and teams struggle with every minor disruption? What makes certain people better equipped to roll with the punches?
According to bestselling author and ADP Researcher Marcus Buckingham: “people don’t fear change, they fear the unknown.” To use a timely example, if your company is attempting to rush back to “normal” (going into a physical office, business travel, etc.) he suggests having a concrete plan that offers visibility to senior leadership and their teams as to exactly what this will look like.
Simply put, it’s not enough to send a company-wide email that says: “Okay folks, starting Monday, business as usual!”
Furthermore, according to his recent study on building resilient teams: Only 17% of the workforce feels “highly resilient.” Clearly, company leaders across business types, industries, and geographies have a tremendous amount of work to do in the area of building a resilient company.
Another interesting finding of note is the correlation between experiencing constant change and resilience. The data show that workers who experience five or more changes at work are 13.2x more likely to be resilient.
To help make the findings actionable, Buckingham breaks down the workforce into three categories: (1) senior leaders, (2) team leaders, and (3) self. For each bucket, he offers tips for how to help build resilience more effectively, based on questions posed to each group. These include things like vivid foresight and visible follow-through; anticipatory communication and psychological safety; and a sense of agency along with doing work we love.
If you’re a company leader, I highly recommend checking out the full study, or his related article What Really Makes Us Resilient in Harvard Business Review. (Bonus: Take his “Gift of Standout” assessment for free here.)
Why Diversity is Key to Productivity and Innovation
BluWave has worked with hundreds of companies across a variety of industries ranging from manufacturing and consumer goods to information technology and healthcare. Despite the differences that exist between them, one thing remains constant: for today’s companies, innovation and diversity are inseparable. There is no bigger obstacle to the introduction and refinement of new ideas than groupthink, which is why the most creative companies are the ones that encourage robust discussion and debate from multiple perspectives. Diversity is not just a matter of recruiting employees with different backgrounds – it is an ethos that your company should seek to cultivate at every level.
How Diversity Can Be An Engine Of Productivity
Diversity is not just a goal companies should pursue for its own sake – it is a way to pressure test ideas and come up with novel and effective solutions to problems. This is why it should come as no surprise that diverse and inclusive work environments often lead to higher performance. For example, a 2018 Boston Consulting Group study found that “increasing the diversity of leadership teams leads to more and better innovation and improved financial performance.” Meanwhile, according to Deloitte, companies with inclusive cultures are twice as likely to meet or exceed financial targets.
Certain forms of diversity can lead to a reduction in negative outcomes for companies as well – a report from MSCI ESG Research found “fewer instances of governance-related controversies such as cases of bribery, corruption, fraud and shareholder battles” with boards that included women. However, while eliminating bias and increasing representation are essential to the health of a company, these are ways to address a more fundamental issue: diversity of thought.
When companies prioritize diversity of thought, they do not just become more innovative – they are also better able to identify and hedge against risk. Companies that value diversity of thought have access to a broader range of viewpoints and insights, and they make employees feel like stakeholders whose contributions are welcomed and appreciated. In turn, these employees are empowered to offer their perspectives without reservation and speak freely to managers about problems that need to be addressed.
Challenges To Diversity & Inclusion
A commitment to diversity and inclusion begins with equitable hiring practices, but this is an area that has always been rife with bias and discrimination. For example, studies in Sex Roles and the Proceedings of the National Academy of Sciences have found that female, black, and LatinX candidates were viewed as less competent and hirable than their peers. There is also evidence that women think they need to be more qualified than men do when applying for the same positions.
There are many ways to address these inequities in the hiring process. First, determine exactly what you are looking for in a candidate and consistently measure potential hires against a specific set of criteria. This can reduce the bias associated with subjective in-person interviews and identify a larger pool of qualified applicants. Second, develop lists of pre-vetted candidates (this is what BluWave provides to our clients) so you know everyone under consideration already meets your requirements, regardless of race, gender, etc. And third, consider hiring employees on a project-to-project basis (what I call the agile workforce). This will naturally bring a broader range of perspectives to the company because it means new employees are being hired on a regular basis.
Diversity in all its forms is becoming a top priority for companies in many different industries. To compete, the first step is building your hiring strategy around the discovery and recruitment of candidates who meet your needs and bring unique skills and experience to the table.
Promoting Diversity In All Its Forms
Companies are increasingly prioritizing diversity across a broad range of categories. As we discussed above, this does not just mean increasing demographic representation – it also means creating an inclusive culture that facilitates open dialogue and cooperation at every level of the company. Real diversity and inclusion require companies to listen to employees, take their contributions seriously, and amplify the widest range of voices possible. There are many forms of diversity – from racial to geographic to socioeconomic – and companies should celebrate and learn from all of them.
According to Gallup, one of the reasons one-third of employees feel disengaged at work is the perception that their viewpoints and concerns are not taken seriously. The survey found that just 30 percent of American employees strongly agree that their opinions seem to count at work. This should be a disconcerting fact to any company that values the diversity of thought – the majority of employees feel like their contributions are being dismissed, which will make them less inclined to offer suggestions and point out problems when they arise.
This is the opposite of inclusion, but companies can change course by actively seeking feedback via the voice of the employee platforms (which can highlight instances of bias or discrimination), encouraging managers to be receptive to all points of view, and breaking down silos that can separate departments and teams from one another.
Diversity is a word that pops up on corporate websites and in training handbooks often, but company leaders often have a superficial commitment to making their workplaces more diverse. But this status quo is rapidly changing as companies increasingly recognize that an emphasis on diversity does not just make the world a fairer place – it also leads to happier, more innovative, and more productive workforces that will have a greater economic impact.
The original version of this article appeared in People Talk.