Need: Value Creation

5 Value Creation Ideas for Private Equity Funds

October 31, 2018 Sean Mooney

The business of private equity is getting more business-like. Today, most private equity funds are largely managed like partnerships, not like the companies they own. However, many firms have realized the private equity industry has now matured into an industry and are starting to manage their own companies like their portfolio companies.

Here are some value creation ideas being implemented with our other PE fund customers that can help you get the ball rolling on maximizing the effectiveness and competitiveness of your private equity fund operations.

Get Digital Marketing Going
Amazingly, many B2B businesses still aren’t reaching their full potential because they don’t understand or appreciate the power of digital marketing. Nearly all private equity funds fall in this bucket and are not taking advantage of this low-hanging fruit because they don’t see it as particularly relevant or appropriate for their model.

However, there are only so many hands that you can shake during the course of a year. With digital, you can regularly speak to thousands of intermediaries, business owners, and other influencers at the click of a button.

To do digital well, you need to do more than an update of the creative on your website or a quarterly deal announcement email. You should be using an integrated approach leveraging not only email, but also paid search, SEO, and regular content that is interesting and relevant.

The good news is that digital can now be done well with a relatively reasonable budget. Don’t try to brute force this with internal resources. You can outsource this to professionals who can help you get it done right and allow your team to leverage their strategic strengths rather than taking precious time to sub-optimally recreate the wheel.

Never Say Small When You’re Talking About Your Money
Most private equity funds don’t think meaningfully about the spend within their own organizations after compensation, real estate, and deal-related expenses. However, you’re spending money on all sorts of other things that add up. You don’t want to let the tail wag the dog by any means, but there are some relatively easy tools you can use to drive savings and free up some cash to invest elsewhere in your organization. One such tool that both you and your portfolio companies should use is a group purchasing organization (GPO). You’ll likely find savings in travel, office supplies, and data and telephony. It may not change your world, but it’s free money that’s relatively easy to get.

Stop Getting Bogged Down With Post-Closing Tactics
PE funds typically come up with a differential strategy, use it to prevail in a process, and then get swamped out of the gates with the minutiae of the 100-day plan. Rent an independent consultant hailing from a top PE ops improvement consulting firm to drive tactics that are important but not the best use of your teams’ scarce time, such as:

  • Reporting
  • KPIs & dashboarding
  • 13-week cash flow forecasting
  • Ad-hoc onboarding analyses

And other similar tactics. Groups who use these resources also typically ask for and get baskets in their debt agreements and push these costs below the bottom line (P.S., they’re also great for preparing for sale).

Use the Robots
Your team’s opportunity costs are in the $1,000s per hour. We’re regularly asked at BluWave how many employees we have. Our answer is always “as few as possible.” Like you, each hour is precious for us and we use technology, automate, and outsource whenever possible so we can as optimally as possible focus resources on our strategic cores. PE funds should do the same by using and getting the most out of the latest CRM software, portfolio company reporting solutions, strategic planning tools and the like.

Get Leverage
Using variable resources is a necessity in this day and age in PE. Groups who use them well can accelerate growth, development, and value creation in profound ways. However, it’s hard to know who is good; as soon as you like them, they change or aren’t available, and as a single fund it’s hard to hold third party resources accountable. Shameless plug: Use BluWave. Our business is to be the expert of experts, so you can focus more on your strategic priorities.

You can’t do it alone. Value creation is, in large part, about the people and resources you leverage to help, especially for private equity funds. Take advantage of the pre-vetted network of experts available through BluWave today. Get in touch with us.

Why Your Company Needs a Fully Realized Digital Marketing Strategy

July 17, 2018 Sean Mooney

As a player in the private equity space, you know the struggles of growing a company under tight deadlines and budgets. While you may think that digital marketing is better suited for “the other guys,” e.g. B2C firms, larger companies, groups targeting millennials, this isn’t the case. Middle market businesses across verticals can harness the power of digital marketing for business growth.

Digital marketing is one of the most underused tools in the toolbox.  By not implementing these methods and realizing how important a digital marketing strategy is, your leadership teams are leaving money on the table.

Here are a few things you should know:

  • Per McKinsey, companies with strong B2B digital marketing plans/brands see 20% increased performance
  • Per CEB, B2B buyers are now nearly 70% through their buying process before contacting a provider
  • Per Google, B2B buyers are typically willing to consider two options by the time they engage a potential provider

Marketing now plays a much more important role in your selling process.

Digital Marketing is More Affordable Than You Think
Despite the number of acronyms thrown around and the ever-changing stream of marketing platforms, executing against a digital marketing plan is more attainable than many lower middle-market and middle-market firms may expect.

You don’t need high-end, expensive software: there are now a number of powerful, simple to use, and cost-effective tools available.

You can also start by renting a fully capable digital marketing team before investing in an internal one or simply outsource certain roles to augment your existing team’s efforts.

Implementing a multi-dimensional digital marketing strategy may seem like it will stretch your company’s already tight budget, but overspending on a digital marketing budget isn’t necessary. Working with a marketing services agency instead of hiring internal staff gives you the resources you need at a price that makes sense for the bottom line.

Key Elements of your Digital Marketing Demand Generation Plan
Once your company is ready to work with an agency, here are a few items they should concentrate on to gain the benefits of digital marketing:

  • Data – It’s hard to do digital marketing effectively without good data. Make sure you have it and treat data as a resource that needs to be invested in and maintained like any other asset in your business.  B2C data can be relatively robust over time, but B2B data degrades at about 5% per month.
  • Content — Bottom line: your company needs to attract potential customers to its website. Quality content, including blog posts, infographics, and other well-written ad engaging copy can help increase credibility and your position within your industry while intriguing prospects, causing them to stay on your site for longer periods of time, and reach out to you for more information. Make this content targeted:  Per Hubspot, 96% of B2B buyers want content targeted to their own industry.
  • Search Engine Optimization (SEO) — Many people think SEO is cost-prohibitive, but it doesn’t have to be. A technical SEO expert, combined with in-depth content, can effectively raise a website’s ranking in a short time with minimal cost.
  • Social Media — For a company looking to increase their visibility, social media is key. For B2C companies, Facebook, Twitter, and Instagram help your company connect with customers and prospects. Social media is also becoming critical for B2B customers who are finding their customers in both traditional social platforms as well as business focused platforms like LinkedIn. There are also a variety of analytics from these platforms to demonstrably show how your firm is performing, both over time and against competitors.
  • Paid Search Marketing — While there is a financial barrier to paid search, your portco doesn’t need a huge budget to be successful. Even small companies utilizing well-targeted campaigns with the right keyword strategy can yield powerful results that pay for themselves.
  • Email – Most companies already do email marketing in one form or another. It’s the easiest way to get started.  You shouldn’t do email alone, though, as its increasingly hard to get through the noise in the inbox. Use this tactic in concert with all of the approaches above and you’ll see profound results.

A fully-realized digital marketing strategy is a key step in your company’s continued development.  Once a marketing plan and the resources are in place, you should set clear goals and expectations for growth with your internal and external teams and hold them accountable.

Ensure Your Portfolio Companies Have the Resources They Need
Don’t let your company’s digital-fueled growth stagnate or never get off the ground. Your portfolio company can get started quickly by leveraging the skills of a top outsourced agency that has the functional capabilities you need, the industry experience you require, and the budget you have.

Rent 10% of a bunch of A’s versus owning 100% of the B or C capabilities your budget will support: you’ll get better results and save time, money, and the struggle of hiring for a specific set of scarce skills.

Finding the right resources should never be a barrier to success. Learn more about how we help your portfolio company build value by working with PE-tested expert service providers.

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.