Category: BluWave Insights

How the alternative workforce fits into the future

March 27, 2020 Sean Mooney

A few weeks ago, before the world seemingly imploded with the Nashville tornado and news that the coronavirus was on the move and spreading fast, BluWave was tapped for an Inc. Magazine article about how the “alternative workforce” fits into the future of work.

In retrospect, and without knowing it at the time, the insights we gave couldn’t be more true—particularly now that millions of companies have been upended and will rely on fast-moving, highly-skilled experts to help them rebuild and steer their ships in the right direction.

The three key takeaways of the article are this: We’ve entered an age of specialization, the right top-notch talent at the right time isn’t easy to come by but is absolutely necessary for growth, and harnessing the power of networks is increasingly important.

With regard to that last one (which is how we fit in) this is an important data point:

According to Deloitte, specialized talent networks “now manage over $2 billion in outsourced activity, employing hundreds of millions of people in every geography of the world.” 

And as the article states: “These numbers are only going to increase in the coming years, as the alternative workforce continues to help companies keep pace with the demands of a rapidly shifting economy.”

We believe the economy is going to fundamentally change in light of recent events to be more agile so businesses can grow anew by doing more with less. The specialized talent ecosystem is going to play a critical role in our economic resurgence.

If you have 7 minutes, the full article is definitely worth a read.

Please follow us on Twitter for news, insights, and things that will make you smile: @BluWavePartners

What you need to know about the CARES Act

March 27, 2020 Sean Mooney

Yesterday, we hosted a live “CARES Act” session in conjunction with The Cypress Group, a leading Washington DC advisory firm that advocates for the private equity industry and a member of the BluWave network. Our goal was to offer an up-to-the-minute, inside look into how the proposed bill would likely affect private equity and its portcos.

Below is a high-level overview of the $2.2 trillion package, which provides insights into how the funds are being allocated. We encourage you to listen to the live recording (30 minutes) if you want to dive into more detail. As always, feel free to reach out if we can help you in any way. Now more than ever, it’s important to ensure your companies have the agility and expertise to navigate uncharted waters.

High-level overview of the CARES Act budget allocation:

Severely Distressed Industries: $500 billion 

  • Passenger air carriers, cargo air carriers, critical to national security, supporting Federal Reserve lending facilities 
  • New oversight measures 

Payroll Protection Plan: $346 billion 

Direct Payments (Recovery Rebates): $300 billion 

Tax: $290 billion 

  • NOL carrybacks, employee retention credits 

Unemployment Insurance: $260 billion 

  • Pandemic Unemployment Assistance, $600/week for 4 months 

Healthcare: $180 billion 

  • Strategic National Stockpile, public health agencies, hospitals, COVID-19 testing 

State and Local Governments: $175 billion 

  • Coronavirus Relief Fund, infrastructure Education 
  • Student loan relief Housing
  • Foreclosure moratorium, mortgage forbearance 

Supplemental Appropriations: $339.8 billion

8 Tips for Weathering the Storm

March 17, 2020 Sean Mooney

This has to be the strangest St. Patrick’s Day on record.  To me, the business world feels a lot like the fog during the few weeks after 9/11 and when the bank meltdowns reached a fever pitch in 2008.  Just like then, I’m quite sure that calm will prevail and that “this too shall pass.” 

We’ve been getting all sorts of calls the last two weeks from fellow PE fund and portco clients to help understand how they can best get ahead during uncertain times.  If nothing else, it feels good having contingency plans in process versus waiting to see what fate has in store. 

Here are a few tips we’ve been sharing with our network…

#1 Scenario Plan:
Define your best, worst and most likely scenarios.  Document actions.

  • In your worst case, what would it take to be cash flow positive?
  • If your bank shuts you down and you lose access to capital, what will you do?
  • Other things to consider:
    • How solvent are your key clients and key vendors?
    • What can you shift from fixed cost to variable cost/outsourcing?
    • How can you take advantage of relative strengths and address potential opportunities?
    • It may soon be a great time for an acquisition if your balance sheet is strong.

#2 Communications:
There are few things scarier than silence during troubling times.  Put together and communicate your business continuity plan for both inside and outside your organizations. We have some really good groups for this if needed.  

  • Talk to everyone: be “seen” with employees and customers.
  • Leaders walk the halls (virtual or otherwise) and calmly discuss future plans.
  • Look for successes to celebrate.

 #3 People:
Bring in HR specialists to help message to employees or put action plans in place should rightsizing be required.  

  • Take care of your key employees.
  • It may soon be an advantaged time to find great talent.

#4 Cost Reductions:
Easiest effort / lower return: Indirect spend reduction with GPOs.  Easier Effort / Mid Return: insurance cost reduction.  Harder effort / Higher Return: Direct spend takeout (best with co’s using plastic, paper, metal), lean-6 operational improvements.  

  • Review your balance sheet and income statement. Do zero based budgeting.  Remove all expenses that are not contributing to revenue generation – selectively add back necessary items and look for large ticket items that might be re-quoted.
  • Take a hard look at year-end raises and bonuses – can you afford them?

#5 Technology:
If your workers can go virtual, it doesn’t hurt to socially distance.  If you aren’t using cloud collaboration tools like Zoom or Microsoft 365, put these in place.  They’re relatively inexpensive and effective.  BluWave opted last week to start working remotely.  

  • Keep your virtual workers engaged.  Get your teams together 3x a day with cameras on. 
  • Find moments to create some levity and the in-person feel of your office.  We had a virtual “happy hour” last night.  

 #6 Go Variable:
Every company right now is thinking about their hiring cycles.  It’s hard to hire if you can’t forecast. At the same time, the world needs to keep on rotating.  Think about going more variable with interim resources. You can turn them on / off without making long-term commitments, along with getting the optionality of try-before-you-buy.  These types of expenses can also be positioned as add-backs in retrospect. We have a whole universe of PE-grade resources that we can plug in for you. 

 #7 Ops Improvement:
If you don’t have a lot of slack in your rope from a financial performance perspective, get ahead of it.  After the first covenant default, you usually have time. After the second covenant default, the bank often brings in their own expensive and biased turnaround groups.  Don’t wait to let this happen. You want the improvement group working with the bottom of the balance sheet in mind. If you show action and progress, banks will generally play ball.  As usual, we’ve mapped, vetted, selected, and segmented this fragmented universe if helpful. 

 My plan in the meantime is three-fold:

  1. Be like a duck. Stay calm on the surface, but paddle like hell underneath.
  2. Plan and prepare to win.  
  3. Have a large glass OR THREE of Guinness tonight.

Don’t forget follow us on Twitter for insights, industry news, and company updates: @BluWavePartners 

COVID-19 According to BluWave Network Experts

March 11, 2020 Sean Mooney

On Thursday, March 5, 2020, we hosted a COVID-19 Intel Session for our PE fund stakeholders featuring leading experts from healthcare, government, and supply chain risks. For those who missed it, or perhaps aren’t officially part of our network yet, we wanted to provide the key takeaways on this important and rapidly-evolving topic.

As you likely know, COVID-19 is highly contagious, but the fatality rate is likely to be far lower than currently reported figures that use confirmed cases as a denominator. The high transmissibility is causing governments and businesses across the globe to limit movement of people and goods. This limitation of movement is causing disruptions in supply chains, which in turn is affecting global business performance. Measures can and should be taken going forward to limit risks within your businesses.

Here’s what you should know…

HEALTHCARE
According to Dr. Jeff Runge, President of Biologue, former CMO of DHS:

  • As of March 5th, out of the nearly 100k cases reported, fewer than 200 are in the U.S., but that number will continue to rise in the coming weeks. [NB, as of March 10th, total and US cases were 118k and ~800, respectively].
  • The virus is highly contagious, about twice that of seasonal flu but less than SARS-2003. The highest risk of death is in people over 60 or those with coexisting chronic medical conditions or with high or prolonged exposure to the virus. Children are less affected, based on the Chinese experience.
  • For this virus, we don’t have vaccines or therapeutics, so public health prevention measures are the only countermeasures we have. Washing hands after any possible contact with a contagion, wiping down surfaces, and avoiding contact with other people and animals when you’re sick.
  • The good news is that with isolation of the sick, social distancing, and good personal and environmental hygiene, it possible to reduce the number of people who will become infected by someone sick with coronavirus. The likelihood of infecting others is referred to as a reproductive ratio (R0). A disease with an R0 above a 2 will sustain an epidemic. Based on a study of the first 425 COVID-19 patients in China, the estimated R0 of COVID-19 was 2.2. The goal is to implement public health prevention measures such that the R0 will be less than 1.0, in which case the epidemic will die out on its own.
  • Every company should have explicit plans and policies in place to limit unnecessary travel and attending large work gatherings, no travel if employees are sick, with international travel being more risky than short domestic flights so far, to prevent sick workers from coming to the office, and apply permissive use of remote work.


GOVERNMENT
According to Aaron Roth, Managing Director of Chertoff Group:

  • Be mindful of source information. The government and academia are providing good information. Similarly, the mainstream media is generally providing good information, but be cautious of social media and non-authoritative sources.
  • There are capacity constraints with medical supplies and personal protective equipment (PPE) for health workers. This will continue to be a government focus area.
  • Perhaps less obvious, companies and employees need to also be thinking about cybersecurity. Working remotely introduces a higher risk level of cyberattacks. Bad actors will likely take advantage of this, so beware of anything that comes across the screen that says “Coronavirus” or “COVID-19,” etc. Be extra vigilant to cyber risks during this time.
  • As this situation evolves, we should expect the government to institute additional international travel restrictions and we will likely see increased screening at airports if the outbreak persists. Companies must continue analyzing their business risk as it relates to international travel and their overseas operations.
  • The Federal government will play a meaningful role in providing guidance and resources, but treatment/containment will occur at the local level and likely vary from State to State and city to city. You need to understand your risks by location. Your businesses should be in contact with their local authorities and local healthcare providers so they are best positioned for the coming months.
  • Each of your businesses should have a business continuity plan with designated leaders.


SUPPLY CHAIN
According to Allison Wood, Associate Director at Control Risks:

  • Beyond the impact on tourism, airline industry, and other travel-related businesses, COVID-19 has put a huge burden on companies with a heavy reliance on China for the supply chain: consumer products, industrial goods, auto, etc.
  • Right now, most businesses in China are not operating fully. Labor is not at full capacity; only 66% of surveyed employees have returned to work. We think the situation will improve; but we still expect disruptions for weeks and months in areas of cross-country road support and shipping.
  • Every company needs to map their supplier networks. Suppliers in China particularly need to be actively monitored and communicated with. Critical suppliers anywhere in the world need to also be closely monitored as they may be impacted by their own suppliers and other virus-related disruptions may be coming their way.
  • Our economic partners are estimating a noteworthy decline in global economic performance due to COVID-19. Based on what we see now, global growth could slow from 2.5% to 2.3%, China could slow from 6% to 4.8%, and the U.S. could slow to 1.3%, the lowest growth rate since the Great Recession.


INFORMATION RESOURCES

Our panelists recommend that you monitor the following sources to keep up with the latest.

Bottom line: With some prudence, proactivity, planning, and a keen understanding of the risks, companies can lessen the impact of COVID-19 both at work and at home.

For further information or assistance with your companies, please reach out to any member of the BluWave team or send an email to info@BluWave.net.

BluWave’s 2018 Year in Review

January 22, 2019 Sean Mooney

A Year in Review
In 2018 alone, BluWave supported over 700 private equity projects, providing due diligence, value creation, and private equity operations services to our clients. Upon review, we found that private equity funds and their portfolio companies are investing more and more resources in value creation initiatives. Due diligence services remain critical to understanding potential investment targets, but the way they’re done is evolving. As we look back on the previous year, we’d like to reflect on some of the areas where we impacted change and provided key insights. We’ve also taken a look at the categories of due diligence and value creation that held the most potential for our clients.

Due Diligence Needs Remain Acute and are Changing
Whether you’re making an investment in a new platform, doing add-on acquisitions, or researching and developing new product lines, an ounce of prevention is still worth a pound of cure. Last year, about 40% of our support activities were in the Due Diligence arena.  Here are some of our top categories by level of activity:

#1: Market Study / Strategy

Know your market opportunity and get your strategy down before you make investments. We saw significant activity with groups looking for pre-established expertise associated with market diligence and strategy firms. Our most proactive customers have been moving away from one-size-fits-all generalists who have to learn the market while doing projects.

#3: Voice of Customer

Your customer will tell you where to go. When a full market study isn’t necessary for pre-acquisition diligence, an increasing number of our clients are looking to conduct voice-of-the-customer studies. This lowers costs and allows for a more customer-focused insights. This is also a must do for significant R&D projects.

#4: Geographic Diligence & Analytics

Who, what, when, WHERE, why. Our private equity fund customers are increasingly moving their value creation planning into the pre-closing phase, so they can confidently understand and execute geographic growth strategies immediately after closing a deal.

#8: Executive Team Assessment

Know thyself. People matter more now than ever before. These days, you have to know if you already have the right team in place or will need to make changes quickly.

#10: Merger Integration Planning

Add-on acquisitions are part of the standard playbook now for most proactive business strategies. Our clients know that pre-merger planning is critical to the success of buy-and-build strategies. You can’t do everything at once without adding resources. Don’t tax your full-time staff to get it done semi-right: rent some experts to show you the way.

Value Creation Matters More Now than Ever Before
At BluWave, we’re experts at helping clients win by using proven resources to execute accelerated value creation. Staying the course can no longer be the solution — you need to fly over and around your corners. As such, more than half of our time in 2018 was dedicated to helping our clients win the race after investments were made. Below are some of the top 10 value creation categories we supported clients with in 2018. Contact us for the full deck of BluWave’s 2018 Insights including more of our value creation insights.

#2: Executive & Staff Recruiters

You shouldn’t hire a real estate agent from Manhattan to buy a house in Nashville. Most BluWave clients have learned the perils of the bulge bracket recruiting machines. Our clients very regularly came to us in 2018 to connect them with private equity-grade recruiters who specifically know their markets and functional areas and aren’t encumbered by politics or no-call lists.

#4: Digital Marketing Demand Generation

Use this thing called the Internet to regularly reach 1,000s at the click of a button. Leading B2B companies are figuring out what B2C companies already know – that digital marketing can be a huge driver of demand and growth. BluWave’s clients are adopting digital marketing strategies in large numbers.

#6: Procurement and Sourcing

Why are you leaving free money on the table? Most portfolio companies have a lot of unmined money in their P&L. Our clients are using GPOs, indirect and direct spend reductions groups to drive savings and add multiples of enterprise value at exit.

#9: Pricing Strategy

Raise the tide to lift your boat. As we’ve all learned, intelligently raising prices is one of the best ways to increase profits. There is both an art and a science to this. Our clients regularly turned to us to connect with the best experts to help them get optimal results.

Insights to help you win
Whether you’re conducting due diligence or building value, you owe it to your company to get it right the first time and you shouldn’t have to use your scarce and valuable time entering queries in a search engine or calling friends to find an untested solution. More than 225 private equity funds and their portfolio company leadership teams turn to BluWave to support their success. To learn more about how BluWave can help grow your business or to receive our BluWave 2018 Insights deck, contact us today via the form below. Our industry experts and professional network will help you achieve your business goals in no time.