BluWave Insights Archives - Page 4 of 5

An interview with the American Investment Council’s Drew Maloney

October 12, 2020 Sean Mooney

At a time when companies are in desperate need of capital (and every other form of support they can get), the private equity industry has assumed a larger role in the U.S. economy. That’s why now is a good time to take a closer look at private equity – how it functions, the ways in which it’s misunderstood, and how it can help companies get through one of the most difficult economic downturns in decades. Drew Maloney is the President and CEO of the American Investment Council (AIC), and we’re delighted that he was willing to speak with us about how his industry works, how PE firms are responding to COVID-19, and what other companies can learn from private equity.

Sean Mooney: What role does PE play in the U.S. economy?

Drew Maloney: Private equity plays a significant role in the economy – the industry invests in more than 30,000 companies in every state and district, directly employs 8 million workers, and provides capital, expertise, and supply chains to help companies grow and restructure. PE investments also provide significant returns to retirees throughout the country, making retirements more secure.

During economic distress like this one, flexible and patient capital is more important than ever for businesses to stay open and continue to employ their workers.

SM: What are the biggest misconceptions about the industry?

DM: At AIC, our primary mission is to educate policymakers about success stories. In the news cycle, conflict sells. But the majority of PE deals are successful. The fact is that private equity investors are deeply committed to the success of their portfolio companies. In addition to the reputational risk of failed investments, they’re required to have “skin of the game” and invest in the funds that they manage.

PE firms invest in businesses of all sizes, but particularly in the middle market. Many of these businesses don’t get the attention of the big splashy public companies, so the public doesn’t necessarily hear about the value that private equity is able to create in their portfolio companies. It’s incumbent on the industry to explain how we’re helping companies get through COVID-19 and making the economy stronger. We have to define ourselves or others will define us.

SM: How did the private equity industry perform during the Great Recession?

DM: PE-backed companies are better positioned to ride out a downturn – during the last recession, for example, they generated returns well above 10 percent per year. For one thing, they’re much more nimble, agile, and can move faster. For another, they have operational expertise, access to capital, and extensive networks, which eases the burden on managers and allows them to take the time to create lasting value. This is what I describe as long-term, patient capital.

SM: How is the PE industry responding to COVID-19?

DM: PE managers are working to save and strengthen the businesses in their portfolio. As liquidity dried up earlier this year, private equity managers made PIPE deals with public companies, invested in debt instruments in dislocated markets, and made equity investments in businesses that needed capital to ride out the pandemic. They also contributed to their communities, donating hospital beds, spearheading back to school initiatives, and providing resources to teachers and parents.

For example, we recently launched a new Back to School initiative because we know so many families are trying to navigate this unprecedented school year. If you visit our website, you can learn how private equity-backed companies are helping make school safer and more accessible for students, teachers, and parents.

SM: What can non-PE backed companies learn from the PE industry, particularly during COVID-19?

DM: First of all, they need to have the flexibility to react to a rapidly changing marketplace. They should always think ten years out and try to make decisions over the long term. It’s also important to avoid panicking – tap into your networks, develop a plan, and be prepared for an environment of uncertainty for the foreseeable future.

How We Did it: Private Equity Associate Case Study

October 6, 2020 Sean Mooney

With our extensive private equity knowledge, we use time-tested frameworks to assess PE-grade investment professionals for interim work opportunities with our clients. This means when clients have a need, we can move swiftly to connect them with viable, third-party resources. When a private equity fund in our network unexpectedly lost two mid-level investment team members within a few weeks of each other, they needed to quickly find a short-term resource who could meet its team standards and bridge the gap while it searched for a full-time hire.

For the full story, read the case study here.

BluWave Insights: How the Agile Workforce is Impacting the Economy

August 31, 2020 Katie Marchetti

Many hiring managers report that they face a talent shortage, which is why the agile workforce – independent professionals hired on a project-by-project basis – is only going to become more critical in the coming years. In my first article for Toolbox HR, a new platform for executives to learn about everything from cybersecurity trends to the nuances of “people and talent,” I explore topics related to this workforce evolution.

What is the agile workforce?
Simply put, it’s flexible, filled with experts, and moves quickly to help companies address a wide range of talent issues. Companies can access industry- and project-specific expertise with the flexibility to quickly and efficiently adapt to rapidly changing economic circumstances – crystalized in the massive economic fallout of COVID-19. Agile workers are becoming more important all the time.

In the article, I address the following:

Finding Professionals With the Right Skills
Why Agile Workforce Isn’t the Gig Economy
Making the Most of the Agile Workforce

Click here to read the full article, and please feel free to share/amplify to spread the word!

How We Did It: Cost Reduction Case Study

August 25, 2020 Kyle Johnson

PE funds across a broad spectrum of industries often approach us with specific, episodic needs. Our first step for matching them with best-in-class, third party resources is to understand the nuances and unique challenges they face. When a private equity firm acquired a leading plastics company that designed and manufactured innovative plastic-injection-molded products, the firm believed there was room for improvement and cost reductions in the company’s supply contracts. We quickly matched these criteria to the pre-vetted candidates from our invitation-only network, rooted in our founder’s 20 years of PE industry experience.

For the full story, read the case study here.

State of PE: An Interview with Huron Capital’s Gretchen Perkins

August 13, 2020 Sean Mooney

Private equity is a widely misunderstood industry – from the common belief that Private Equity firms snatch up companies just to strip them down and sell them to the lack of awareness about the pivotal role PE plays in the modern economy. Gretchen Perkins is a partner who focuses on business development at Huron Capital, and there’s nobody better to correct the mistaken assumptions about her industry and give us a glimpse into the current state of PE. Gretchen was kind enough to answer a few of our questions about the state of her industry, the effects of COVID-19 on her firm, and what she envisions for the future.

Sean Mooney: Tell me a bit about Huron Capital’s investment focus.

Gretchen Perkins: We’re a middle market PE firm that implements a buy and build strategy to grow businesses. We focus on business services, consumer goods, and specialized industrial companies in the United States and Canada. We have both a control buyout strategy and a non-control equity strategy.

SM: What are a few of the biggest myths about the PE industry?

GP: The single biggest myth about PE firms is that we buy companies and sell them in pieces to make our money. The PE industry is a significant job creator across the U.S. – over the past ten years, PE-backed businesses created more jobs and secured more sales than other companies. There’s a reason college endowments, pension funds, insurance companies, foundations, and nonprofits invest in PE – it has been the single leading asset class over the past 20 years. There are billions of dollars flowing into PE because of the returns and the fact that the industry creates more value and is less volatile than other investment vehicles.

Despite the perception that PE firms always take over and try to sell companies quickly, the PE industry plays a long-term game. Firms generally want business owners to stay and maintain equity in the business – they don’t just take over. We want to make the companies substantially better over time because it’s the best interest of both our firm and our stakeholders.

SM: What was your firm’s initial response to COVID-19?

GP: We acted several weeks before everything started shutting down to increase support for our portfolio companies. For example, we developed a Rapid Response Playbook focused on the implementation of safety protocols and developing guidelines for remote work. There are 7,000 employees at our portfolio companies, and their safety is our top priority.

SM: How do the prospects for recovery look?

GP: When the crisis hit, we immediately started doing 13-week cash flow forecasts, and we’ve discovered that things aren’t as bad as we initially thought it could have been. Now we’re focused on implementing our Restart Playbook, which is designed to take a close look at business operations across our portfolio and help companies emerge from the crisis even stronger and more adaptable. We’re doing everything we can to help our portfolio companies navigate COVID-19 and the economic aftermath, but our management teams are rising to the occasion. This should serve as a reminder that in the current state of PE, firms are more interested in finding effective partners they can work with to build great companies over the long run than ineffectively micromanaging the companies in their portfolios.

SM: What types of businesses are you focused on investing in and growing now?

GP: We’re looking at add-on acquisitions to companies that can thrive during the crisis – insurance companies, for instance. We are also looking into food and beverage businesses that have proven to be COVID-19 resistant. But what we’re most interested in are companies that have solid leadership teams and growth potential – these are the partners that will help us move into the post-COVID-19 era in a stronger position than ever.

Industry Insights: An Interview with ParkerGale’s Devin Mathews

July 21, 2020 Sean Mooney

This is an unprecedented time for private equity firms and their portfolio companies. As the economy begins to show signs of a tenuous post-COVID-19 recovery, there is no telling how the business landscape will be impacted. But one thing is clear: PE will be a major factor in the recovery. Devin Mathews is a partner at ParkerGale, and he generously took the time to discuss his firm, perceptions of the PE industry, and what investment trends we should be keeping an eye on right now.

Sean Mooney: Tell me about ParkerGale’s history and investment philosophy.

Devin Mathews: ParkerGale was founded in 2014, though the founding team worked together running the technology group at another private equity firm. We only do tech buyouts (not venture capital or growth equity) and always take a majority control position. We only buy in two ways: directly from bootstrapped founders or as carve out divisions from larger companies. Both of these strategies have similar dynamics – good businesses that need some care and attention. We focus on owners who are at an inflection point with all their wealth tied up in the business – we help them greatly reduce their personal financial risk and take their businesses to the next level.

SM: Why would an owner want to partner with ParkerGale?

DM: Quality, not quantity, is our ambition. At the end of the day, founders bring us in because they believe we’re going to respect the businesses they’ve built. We’ll change things, but the employees will still feel like it’s a great place to work. We place a heavy emphasis on culture and developing people at our portfolio companies, and even though our expectations are high, we recognize that we have to provide the necessary resources to meet those expectations.

SM: What are a few of the biggest myths about PE?

DM: For starters, not all PE firms are created equal. There are different types of PE firms out there: some are more transactional, while others are more hands-on and operational to help companies build long-term success.

Also, it’s important to recognize that private equity is the economy – it’s not a niche asset class anymore. There are twice as many private equity-backed companies as public companies. This is all the more reason why PE firms have to focus on improving the image of the industry and showing others that our success as an industry is determined by the long term success of the companies we own. This industry cannot thrive if our companies fail.

As an industry, our reputation isn’t great. People sometimes expect all of us to be MBA jerks, with low EQ and high intensity. While much of that is well-deserved, we try to show people we’re human, empathic, and prepared to listen. At ParkerGale, we talk a lot about vulnerability, transparency, and trust. That’s really the only way to get results in our experience.

SM: How has COVID-19 impacted your firm?

DM: We are all getting older around here and have invested during booms and busts before. We all subscribe to the great Howard Marks quote that “you can’t predict – you can only prepare.” So we don’t make predictions. We just get up every day and execute alongside our management teams.

SM: What types of businesses are you focused on investing in now?

DM: We look for software companies that are hard to hurt – that means they have sticky products, no customer concentration, no vendor concentration, and good profit margins. They’re also in segments of the market where VCs aren’t pointing their money cannons, which usually ends up poorly. When we get involved, the companies are customer-centric and profitable, but may not necessarily be doing the things they need to do to secure long-term viability. There are tens of thousands of companies in North America that fit our criteria, and we need to invest in one or two per year. We operate at the small end of the market – we’re providing the first institutional capital that any of these companies have had.

SM: What’s your take on the future of PE investment?

DM: Within the next six months, will founders say “I’m too old for this sh*t” and want to sell even if it’s at a price less than the top of the market? Or will they wait for the market to come back enough to get them the price they need to walk away? Just imagine you’re a founder in your sixties and you’ve been through way too many ups and downs already. Do you have the stomach to hang on a few years or is it time to find the right partner that helps you walk away and enjoy retirement? My sense is that it will be a mix of the two, but as I said earlier, we don’t try to predict. So we’ll just prepare for whatever comes our way.

How to find and leverage expertise

July 14, 2020 Sean Mooney

The COVID-19 pandemic won’t last forever, and companies need to be thinking about how to best position themselves to not only maintain their operations, but also seize upon opportunities and prepare for an uncertain future. This means they’ll have to be agile, getting the right people with the right skills at the right time.

Our economy is more dependent on expertise than ever before – a fact that’s even clearer amid this crisis. A 2019 study conducted by the Society for Human Resource Management found that 83 percent of hiring managers “had trouble recruiting suitable candidates,” 75 percent of whom attributed this problem to a skills shortage in the workforce.

The recovery from COVID-19 is going to require a lot of innovative thinking, which means contributions from a broad range of experts in many different fields. But expertise is scarce – especially for companies with limited resources. Experts are always in high demand, even more so when companies begin rebuilding after a shock like COVID-19. Companies have little margin for error and they’re taking a hard look at their processes and personnel. That’s why we’ll soon see a spike in the need for on-demand expertise across a wide range of disciplines.

Here are a few strategies for finding experts and making the most of their skills.

Know what you’re looking for.
First, your business needs to take the time to thoughtfully define what it needs. For each role, systematically build scorecards outlining what expertise is required for each initiative. This scorecard should measure functional experience, industry experience, budget, values, and the ability to learn and change. For example, if a food manufacturing company is hiring an interim CFO, a candidate with years of manufacturing experience is not enough. The company should look for a candidate who has worked in the food industry, and who has a track record of successfully managing crises and other fluid situations.

Know where to look.
To find experts like this, you could start by canvassing your personal and professional networks with a specific “ask,” and be specific about your key criteria, timeframe, and budget. These constraints and goals will guide which kind of expert you’re looking for. In some cases, you want someone who can mobilize teams rapidly or manage a fast-moving crisis. In others (some forms of product development, for instance), you want someone who’s more deliberate and meticulous.

Use intelligent networks.
Intelligent expertise networks are only going to become more important in the coming years as the need for on-demand skills jumps, availability becomes scarce, and margins for error decline. Naturally, a firm like BluWave with deep industry relationships, proprietary datasets, and pre-vetted networks of private equity-grade resources is going to yield faster, more optimal results.

Explore the alternative workforce.
According to a 2019 report from Deloitte, companies are leveraging alternative workers to address their expertise needs across a wide array of positions. Traditionally, most companies use the alternative workforce for highly specialized technical needs like I.T. However, the employment of alternative workers is rapidly spreading to other areas like sales, marketing, finance, and operations.

Focus on integrating alternative workers and developing their skills.
Despite the surging demand for alternative workers, only 8 percent of companies report that they have “established processes to manage and develop alternative workforce sources.” The alternative workforce offers access to a growing and sophisticated talent pool, but employers need to develop the resources necessary to successfully draw upon this pool.

Companies need to think of the on-demand alternative workforce just like they think about their full-time workforce. Define what is necessary to perform well in each role. Recruit candidates who have the specific expertise you require. Hold alternative workers and their managers accountable for results. At the end of the contract, both the employer and the alternative worker should evaluate whether a longer term, full-time relationship would be mutually beneficial.

The economy is only becoming more interconnected and complex, which makes expertise vital. That’s why companies have to understand what expertise means to them, where it can be found, and how to use their knowledge and talent as effectively as possible.

A version of this post originally appeared as part of the Forbes Business Council.

OODA Loop Offers a Solid Framework for Agile, Fast-Moving Companies

June 12, 2020 Sean Mooney

When I left my partner position at a PE fund to start BluWave, I sought an operating framework to help us build the company in an agile and customer-centric way. I embraced a model conceived by Air Force Colonel John Boyd called the OODA Loop (Observe, Orient, Decide, Act). This framework has been extremely helpful as we’ve grown to serving more than 350 PE funds in a short period of time. Now more than ever, we have found it to be invaluable as we navigate the uncertain world that has emerged since COVID arrived. Here’s how you can use the OODA loop in your business:

Observe:
Get actionable data. One relatively inexpensive approach to gathering the right information is the use of a PE-grade voice of the customer firm to actively talk with your customers. As the economy reopens, ask your customers about the progress of their recovery and what products you should lead with. It’s amazing what customers will tell you if you ask. It’s also crucial to clean your data – we’re equipping portcos with interim data-oriented financial planning and analysis teams that can conduct a sprint in order to make data actionable.

Orient:
Synthesize your observations. Many portcos we support are using PE market due diligence groups to assess competitive landscapes and propose potential courses of action. This is a way to repurpose an existing tool to improve probabilities of success and ROI. We’re also helping a lot of companies rapidly deploy data integration, visualization, and analytical resources to make informed decisions. If you haven’t used these resources yet, now is the time.

Decide:
This is up to you and your team. The only advice I have here is to get buy-in from your team, as well as your board (for the bigger stuff). This is also a great time to question sacred cows, take a close look at SKUs, make your operations more efficient, etc. Never waste a crisis.

Act:
It’s time to get going. After collecting hard data, forming conclusions about it, and making decisions with your team, now is the time to make a move. This is where it’s essential to be as adaptable as possible – the road back to Rome is not going to be straight. Be as just–in–time with your resources as possible. It’s a great time to start using variable resources (aka the “alternative workforce”) to get things done more efficiently and effectively.

Right after you act, immediately begin the OODA loop again. The most successful companies will be the ones that are agile and diligent during this chaotic and unpredictable time.

Research Finds PE-backed Companies More Resilient Than Others During Economic Contractions

June 8, 2020 Sean Mooney

Although states and businesses are beginning to reopen amid progress in the fight against COVID-19, the economic fallout has been devastating. Over the past nine weeks, almost 40 million Americans have filed for unemployment while the unemployment rate reached almost 15 percent in April – a number that has steadily increased since then. The private equity industry plays a substantial role in the U.S. Economy. This raises the question: How is the PE industry equipped to support an economic recovery after such a massive shock?

One way to answer this question is to take a look at how PE-backed companies performed during the global recession in the late 2000s. A 2017 paper published by the National Bureau of Economic Research found that PE-backed companies were more resilient and rebounded more quickly than their non-PE-backed peers during the crisis, which offers hope for our economy today. Here are the top takeaways from that report:

During the last Great Recession, private equity backed companies were able to make greater investments supporting their recovery than non-PE-backed companies. Their average quarterly business investment volume was between 5 and 6 percent greater, an effect that’s “not only statistically significant, but also large in economic magnitude.” PE-backed companies maintained this higher level of investment after the crisis.
PE-backed companies had access to more debt and equity capital than their non-backed peers, by 4 and 2 percentage points, respectively. Meanwhile, the “cost of debt, measured by interest expense over total debt, was relatively lower for PE-backed companies during the crisis.” The researchers partly attribute these observations to the fact that private equity firms have strong relationships with lending institutions, which gives them more access to credit. PE investment also “did not lead to a low quality or excessively risky projects.”
PE-backed companies that were more likely to face financial constraints during the recession (as indicated by factors such as their dependence on outside financing and their “pre-crisis leverage”) were especially likely to benefit from PE investment. Overall, the researchers write, “Private equity firms alleviated financing constraints of portfolio companies during the financial crisis, allowing them to invest more when credit markets were frozen and economic uncertainty high.”
PE-backed companies saw “greater growth in their stock of assets in the years after the crisis” and actually increased market share during the recession: “In the crisis period,” the researchers write, “PE-backed companies experienced an 8 percent increase in market share relative to the control group.”
PE-backed companies were comparatively seen as more attractive businesses by would be suitors after the recession. The study found PE-backed companies were 30 percent more likely to be successfully acquired in the post-crisis period. Moreover,

At BluWave, we are already starting to see history repeat itself. Our clients are moving at a rapid pace in support of the resurgence of their portfolio companies. We are witnessing each of the elements of the above occurring in real time once again. Moreover, we are seeing innovative applications of technology and business processes that we’ve never observed before.

While no two recessions are the same, the report suggests that PE-backed companies have several advantages as we navigate another severe economic downturn. Private equity backed companies will have greater access to capital (at a lower cost) which will allow them to strategically invest more than their non-PE-backed peers and in turn support a faster economic recovery in the United States.

What We See Now: Post-COVID Strategy

May 27, 2020 Sean Mooney

As Yogi Berra once said: “The future ain’t what it used to be.”

Those words ring particularly true now, as everyone—from investors and business owners to teachers and healthcare workers—transition to living in a world with COVID-19. The numbers are in, and realistically this isn’t going away any time soon.

The good news is that, while the not so great cards have been dealt, we’re starting to see people embrace our new reality and play the hand. In turn, we’re seeing some amazing proactivity and innovation occurring within our 350 private equity fund customer base.

Here are a few things we’re seeing now:

#1 – CREATIVE INVESTMENT
As we all know, investors are practical optimists. They want to invest and are adapting to help companies succeed. We’re seeing equity investors get creative with where and how they play in the capital structure. We’re also seeing a lot of proactive market mapping repurposing commercial diligence firms to identify unseen opportunities so our clients can do their best to make things happen—if by sheer will.

#2 – TECHNOLOGY ADOPTION
The private equity industry is quickly catching up with proactive adoption of technology. One investment bank we work with is using drones and smart phones to conduct virtual site tours. We’re receiving significant inbounds for data visualization and collaboration resources. In many cases, our clients are sharing that they are seeing productivity actually go up (until 5:00 p.m., when we start getting overrun by virtual happy hours!).

#3 – CLEAN DATA FOCUSED
The victors will be those who are most agile. To be agile, you have to be able to see ahead, which requires clean data. We’re getting all sorts of requests for FP&A resources to clean and align disparate data sets so management teams can pivot as quickly as possible. We’re also seeing growing adoption of novel cloud tools to seamlessly stitch ERP and related datasets together versus embarking on risky ERP implementations.

#4 – LOCATION IS KEY
As flying still poses risks, many organizations are looking to engage variable resources that are geographically proximate to their portco locations. While working virtually is still the norm, physical presence will ultimately be required as companies begin to open up. If possible, make sure your variable resources are within a drive of your portcos. All of our resources are geo-tagged for this purpose.

Before the novel coronavirus reached our shores, we were receiving 30 inbound projects a week from our PE clients. Three weeks later, we saw two projects in a week come in. After a brief pause, now our phone is ringing off the hook again. It’s been amazing to see the tenacity, grit, and action that is occurring in PE across multiple fronts.

Please stay tuned-in to BluWave for “what’s next” and, in the meantime, keep up the good fight.

How Companies Can Leverage Interim Leadership for a World in Flux

May 7, 2020 Sean Mooney

A rapid transformation of the global workforce has been taking place, fueled by digital transformation, specialization, and an increasingly on-demand labor pool. This transformation will only accelerate in light of the Coronavirus pandemic. Your company can’t afford to be paralyzed. In fact, when the world starts rotating again, now more than ever you and global workers need to proactively embrace these changes and be ready to act.

Just look at what’s happening at the government level: a task force appointed by the President in order to tackle COVID-19. These experts have backgrounds in healthcare, infectious disease, economics, and infrastructure. Within a few months, they will have done their duties and will likely be off to fight the next battle. Perhaps a few will stay on longer-term to help rebuild critical healthcare infrastructure that was so clearly lacking.

In other words, having a leadership team that’s dynamic and flexible—given the rapidly changing needs of businesses—is going to be more important than ever within the next three to six months and beyond. The emerging alternative work arrangements are a win-win for both businesses in need and interim leaders with specialized skills. Highly trained professionals will embrace the opportunity to stay relevant, add value, and keep their options open while the economy comes back to life, and companies will be able to stay agile and bring in exacting expertise. Both will be able to see if a longer-term, full-time role is mutually attractive without the expectation and challenge of making a commitment in a highly fluid environment.

These interim leaders can focus on having the maximum positive impact on the company for however long they’re in their role. And the good news for organizations: as everyone is becoming more equipped to work virtually, you don’t have to wait for these people in person. Here are a few things to keep in mind as you leverage interim leaders in the coming months.

Have a specific idea of what you want interim leaders to accomplish
Companies shouldn’t measure the performance of interim leaders in the same way as full-time employees. This isn’t to say you shouldn’t have high expectations (you absolutely should), but it’s essential to recognize how their roles are unique. The first principle with interim leaders should be: do no harm. No matter what, you want the ship to keep moving forward and not disrupt momentum, which means having a tight focus on what you want done within a specific timeframe. For example, what are your top three goals within the first three to six months? By emphasizing well-defined tactical targets instead of overarching strategic goals, you’ll be deploying interim leaders as efficiently as possible.

Transparency and accountability are two of the most important traits for interim leaders, which is why interim leaders and their managers should have an open discussion about what goals they’re trying to accomplish right at the outset. When interim leaders help their colleagues develop a set of concrete outcomes to pursue and metrics for measuring success, this won’t just increase performance – it will also improve morale by giving team members a clear idea of what they’re working toward.

According to Gallup, “mission-driven workgroups suffer 30 percent to 50 percent fewer accidents and have 15 percent to 30 percent less turnover.” However, only 40 percent of employees “strongly agree that the mission or purpose of their company makes them feel their job is important.” This is why it’s vital to outline what the mission is and what steps the company is taking to accomplish it. If anything, interim leaders are under even more pressure to outline exactly what outcomes their teams are trying to achieve – they’re hired with specific targets in mind and they typically have to rigorously adhere to set timeframes.

Without establishing well-defined goals, it’s impossible to hold interim leaders accountable. The alternative workforce is built around accountability, for both independent workers and the companies that hire them. Just as companies want to know if potential leaders have a proven record of finishing projects on time and under budget, good leaders want the ability to prove what they’re capable of by pointing to what they’ve accomplished.

Treat interim leaders like full-time teammates
Interim leaders are recruited because they offer a specialized set of skills that a company’s current workforce can’t provide. To be as effective as possible, however, these leaders should work within the existing protocols and expectations – as well as the current structure and culture of the company – to be as productive as possible without becoming disruptive. They should be treated like full-time resources.

Many organizations hire interim leaders with the expectation that these professionals have specialized expertise and thus should know what to do or will require little management. This approach doesn’t work with full-time executives and will also not work with interim leaders. You still need to manage them with care to enable them to support your organization’s success and achieve desired objectives.

According to Deloitte, despite the fact that American employers are increasingly reliant upon alternative workers, only 28 percent say they’re “ready or very ready” to manage these types of workforces. While just 8 percent of companies report that they have “established processes to manage and develop alternative workforce sources,” almost a quarter have “little to no processes.” The rest are somewhere in between.

This means interim leaders will also have to step up to address this lack of capabilities and processes by proactively engaging with permanent team members right away (asking what they need and what major obstacles they face, for example), starting conversations about reasonable goals and how to achieve them, and familiarizing themselves with the company’s culture and operations as quickly as possible. Companies will be on a steep learning curve with the alternative workforce for years to come, so alternative workers themselves need to equally take responsibility in the meantime.

Why flexibility should be a top priority across the company
The most common mistake people make when they think about the alternative workforce is to reduce it to the gig economy. A surging number of highly trained specialists like the flexibility that alternative work arrangements provide. CFOs, CTOs, and other members of the C-suite want to be more selective with the types of work they do and are open to moving from project to project while waiting to find the right long-term opportunity. This allows them to expand their skill sets, network, and secure long-term positions that will ultimately be better for them and the companies they work for.

And this demand for flexibility extends to other workers as well. According to a 2019 survey conducted by FlexJobs, 80 percent of employees said they would be more loyal to their companies if they had flexible work options, 65 percent said they would be more productive if they could work from home, and almost one-third reported that they had actually left a job due to a lack of flexibility.

None of this will come as a surprise to interim leaders – after all, they likely decided to join the alternative workforce for similar reasons. This is why they should be especially sensitive to the changing demands of American workers and do their best to provide flexibility wherever possible. This could mean any number of things – from providing remote work opportunities to instituting intelligent flexibility that allows for less rigid scheduling while not sacrificing productivity.

Specialized leaders from the alternative workforce are uniquely positioned to address the new normal that will require on-demand expertise in rapidly changing environments. If they combine their needed capabilities with an outcome-oriented mindset and the ability to merge their talents with a company’s existing culture and operations, they’ll be a powerful productive force for the future of work while simultaneously helping to rebuild the global economy.

Bain’s Global PE Report 2020: High Prices and Higher Stakes

April 27, 2020 Sean Mooney

Oh, what a difference a month makes.

Prior to the coronavirus sending the world into a health pandemic and a global economic downturn, Bain & Company released its annual “Global Private Equity Report” to provide context and insights for the current year. While these reports often top 100 pages (which makes them somewhat cumbersome to digest), they are filled to the brim with useful information.

I took a dive into this year’s report and pulled out some highlights. While it’s interesting to look at these insights now through the COVID-19 lens, the key takeaway is the same: higher stakes for value creation.

In a time like no other in modern history, companies will need to create value quickly, efficiently, and with little margin for error. In our experience, this is where expertise comes in. This isn’t the time to be “learning on the job.” Rather, it’s the right time to create your own “value creation task force” powered by individuals or groups who know exactly what to do.

Here are the top 10 things to know, along with page references:

PE buyout deal value remains robust at $551B in 2020 (page 5).
Deal multiples reached an all-time high (average of 11.5x EBITDA) fueled by robust debt markets (pages 6, 7).
Uncalled capital (aka “dry powder”) has been rising since 2012, hitting $2.5 trillion in December 2019 (page 11).
The largest exit channel for PE is strategic buyers (pages 14,15). Judging by our experience at BluWave, strategics typically get aggressive for cleaned-up companies and they’re much less willing to buy fixers.
Private equity is still outperforming public equity over the long term, but the spread is decreasing as absolute returns in PE decline due to industry maturation and related supply/demand dynamics (pages 24, 25).
Fundraising had been robust, but we’re moving toward a world of haves and have nots with fewer funds raising larger sums. Meanwhile, fundraising is taking longer (page 20).
Winning firms tended to be buyout firms with strong track records (top 1 or 2 quartiles), a clear strategy, a high degree of specialization, and strong value creation capabilities (page 22).
Funds are distinguishing themselves by focusing and recognizing patterns for value creation (page 89).
PE funds must aggressively deploy new levers for value creation to continue making things economically interesting and attracting investment as the LP world bifurcates.
Bain believes PE is still best positioned for long-term success, but like always, business gets harder, participants must evolve, and the proactive players will continue to thrive while others will increasingly struggle.

Here’s how the developments we’re seeing at BluWave align with this report: We are seeing a massive shift towards value creation in private equity. As noted in our BluWave Index, PE Fund clients are using us to support value creation more than 60% of the time (ask us for a copy). Value creation is also increasingly being pulled into due diligence streams. PE funds are using BluWave to drive value creation insights during due diligence so they can acquire the company based upon what it could or should be versus what it is or is portrayed to be in the offering memorandum.

Click here to reference Bain’s 2020 report.