Category: Uncategorized

Cash Flow: Importance for Businesses, Portfolio Companies

October 20, 2023 Brad Gerick

Why might a good company fail? It’s often as simple as running out of cash.

That’s why it’s so important that business leaders not only understand what cash flow is but also keep a close eye on it.

BluWave CEO and founder Sean Mooney touched on this topic with Gabe Mesanza, partner at Huron Capital, on the Karma School of Business podcast.

Listen to the Full Episode

Let’s take a closer look at what Mooney and Mesanza had to say about the importance of cash flow, and how private equity firms think about this crucial metric as it relates to their portfolio companies.

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READ MORE: Why Hire an Interim CFO?

What is Cash Flow?

Cash flow is the net amount of cash coming into and going out of a business. It has a substantial impact on liquidity.

Without enough cash on hand, a company won’t be able to pay its expenses, ultimately forcing it to shut down.

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A Fundamental Beacon for Businesses

When times get tough – especially because of the economy – many businesses act more conservatively. Private equity firms, however, often take advantage of these challenging situations by boosting value creation.

Mesanza said that starts with focusing on fundamentals.

“The basic is focus on cash. Just understand your cash position because that is really the lifeblood of the company,” he said. “If you’re struggling with cash, then you really can’t think about much else, very honestly. That is all-consuming, and it leads you to short-term decisions that are often counter to the long-term goals of the company. That to me is first, second, third. In a crisis, focus on cash.”

READ MORE: Interim CFO for a Financial Crisis

Why Cash Flow is Overlooked and Misunderstood

When a business is performing well, executives are even less likely to focus on cash flow. This, Mesanza said, is a mistake.

“We’ve seen a couple of examples of that here recently. Having worked for large companies, even sometimes we ran into really good executives that ran business units and you ask the question of cash, they never even thought about it,” he shared. “Cash was just something that was there and it was swept at the end of the day. When you needed to do a project, you went and asked for the money and it showed up. The idea of cash is not something that is natural for a lot of people, and it’s surprising the number of people who mistake EBITDA for cash.”

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Cash Flow Forecasting and Management

Mooney, who had about 20 years of private equity experience before starting BluWave, said that neglecting cash flow can be a fatal mistake.

“I learned very early on good companies don’t necessarily go out of business because they’re good or bad, they go out of business because they run out of cash,” he said.

READ MORE: Sales Process Workflow: Stages, Examples for Businesses

Instead, he suggested, business leaders should forecast cash flow on a 13-week basis – equivalent to a quarter – week-to-week and monitor progress. Mesanza agreed with this approach.

“One of the first things we do is a 13-week cash flow. It’s interesting for founders, a lot of their personal finances are intertwined with the company, a lot of their personal expenses flow through the company, whether it’s a car or whatever the case is,” Mesanza said. “The moment that you start adding debt to a company and you have quarterly debt payments that you have to make, boy, that really becomes some different level of conversation.”

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How Private Equity Looks at Cash Flow

Private equity firms perform substantial due diligence before acquiring a new business. When they do move forward with a purchase, it’s because they see significant growth potential.

READ MORE: What Makes a Commercial Due Diligence Firm ‘Specialized’?

“The change to being owned by private equity is that we really only want to put in equity or cash into a company to grow it, to build it, to buy other things,” Mesanza said. “We don’t want to put cash in to run the operations.”

These aren’t just lessons for PE firms and their portcos, though. Any business can reap the benefits of healthy accounting practices coupled with a growth mindset.

The Business Builders’ Network is full of third-party service providers who have helped businesses across various industries accelerate their value creation.

Contact the BluWave research and operations team to set up your initial scoping call. They’ll match you with an exact-fit resource from the invite-only network within a single business day.

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Interim Executive Best Practices: Trends in Short-Term Leadership Roles

October 16, 2023 Brad Gerick

Why should a business use an interim executive?

It can be a great way to bridge the gap between full-time hires, give a potential long-term hire a “tryout,” train up less experienced candidates, guide a company through a crisis or even prepare a business for sale.

Whatever the case, interim CFOs, CMOs, CHROs, COOs and the like can be money well invested.

To get the most out of these temporary executives, though, businesses need to have a plan.

Hire an Experienced Interim Executive

BluWave’s Richmond Donnelly discussed the best practices of using interim C-suite talent on a webinar with Mark Steenhoek, Managing Director, Operations, of The Stephens Group and Bryan West, Managing Director, Talent at Resurgens Technology Partners.

Here are some of the actionable insights you can apply to your business’s interim executive strategy.

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When, How To Work with Interim Executives

While there are many situations in which an interim executive might be a good fit, the panelists outlined the most common ones their firms face.

“There’s good reasons and bad reasons that we would hire. I’d say that we find ourselves more in the camp with the bad reasons, and I’d describe those as two,” Steenhoek said. “It’s a crisis situation. Somebody leaves…or it’s a situation where we started looking in this a little bit more post-COVID in that we would have an open CFO role and then it takes nine to 12 months to fill it just because the market was so tight and difficult to find that perfect fit.”

West added that he is a big fan of the “try before you buy” approach. He said he’s encouraged by the number of his peers who are like-minded.

“That was actually reassuring,” he said. “That’s a great way to build a relationship and we’re always open to that.”

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Top Interim CXO Use Cases

Whatever the use case, interim leadership is consistently one of the most-used services in the Business Builders’ Network, according to BluWave’s quarterly insights.

Based on the proprietary data collected from working with hundreds of private equity firms and thousands of leading businesses, the two most-used interim executives are CFOs and CHROs.

Read more about how each of these crucial roles is used:

Based on a live poll of webinar attendees, most PE firms fill multiple interim executive roles per year, taking 3-6 months to do so.

At BluWave, however, we connect you with a short list of exact-fit candidates within a single business day of your initial scoping call.

Why Hire an Interim Executive?

Beyond broader use cases, PE firms and their businesses usually have a specific set of tasks they need this temporary hire to complete.

“We’re able to go in and very specifically orient to on a project basis like, ‘Hey, does this person have experience or the skills to knock out kind of a more tactical list of things?’” West said.

He said that while the overall goal may be the same as when you bring in a full-time C-suite hire, the selection criteria is “quite different” based on what needs to get done.

Echoing BluWave data, Steenhoek said interim CFOs are their most common interim executive hires. The tasks each one is expected to accomplish tend to be the same, with variations depending on the company’s industry.

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Interim Executive Criteria, Selection

Moving beyond the to-do list of items to accomplish, what is it that the world’s top PE firms and businesses look for in interim executives themselves?

West said that having done so many hirings in the past makes it easier to pick up on red flags in candidates. Beyond that, he relies on experience to choose the right person.

“We need somebody that’s been there, done that,” he said. “We don’t want to burn six months of time or three to six months of time on building a function.”

Steenhoek agreed, saying that is his top priority, too.

“I think the second would be, especially if it’s a leadership thing…radical transparency,” he said. “You’re just going to be able to really work together hand-in-hand, which equates to low-ego. They know what they’re there for.”

Learn More: Specialized Executive Recruiters

Setting Interim Executives Up for Success

Once someone is in the seat, the team that hired the individual plays a significant role in their success. How do these leaders set their interim hires up to get the job done?

“There is the team integration and the business integration [and] the CEO is the primary quarterback there, assuming it’s a direct report to the CEO,” he said. “But as far as project-managing the task list…that more often than not happens at our level.”

Steenhoek added two things that he believes are essential in these situations.

“I think really clear communication around what you need and alignment that they’re oriented and really focused on what you tasked them to do,” Steenhoek said. “The second is just being really clear on alignment related to, Are they interim? Are they permanent?”

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BluWave is here to connect you with best-in-class, niche-specific interim executives to help with crisis management, leadership transitions, “try before you buy” and other relevant scenarios.

“Reach out to us at any point if we can ever be supportive with anything you all need,” Donnelly said. “We’re here to help you win.”

Contact our research and operations team to scope your needs and get quickly connected with the service provider you need in less than one business day.

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How To Raise Prices Strategically with Sales Team Buy-In

October 12, 2023 Brad Gerick

When input costs increase, businesses must adjust their pricing strategy accordingly. But it’s not as simple as passing along those costs to the consumer.

First, the sales team must buy in to the new strategy. (This can be particularly challenging for private equity firms and their portfolio companies.) Secondly, you must do so in a way that doesn’t scare off the customer.

But as BluWave CEO and founder Sean Mooney discussed with ParkerGale’s Cici Zheng on the Karma School of Business podcast, those fears are often unfounded when you dig a little deeper.

Listen to the Full Episode

Let’s learn more from these two about how to strategically raise prices, whatever business and industry you’re in.

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Challenges of Raising Prices

Sales Team Buy-In

“I think our portfolio companies might be hesitant to think about price increases or think about value-based pricing,” Zheng said.

Mooney agreed, calling it the “number one area that’s underutilized” by private equity firms that BluWave supports.

Quarterly Report: More Pricing Insights

“In part because it gets the most resistance from the portfolio companies, particularly from sales leadership,” he added. “Because it’s really scary if you’re a head of sales and you say you got to raise price.”

Zheng said this is best overcome by generating belief in the company’s products or services.

READ MORE: Sales Pipeline Funnel: Methodology for Businesses

“If you think about the amount of investment that we’re putting in, in an ideal world, your best-fit customers are also valuing what that is and you’re able to get a value-based price for it,” Zheng said. “At the end of the day, it comes back to, if we really feel [that] the types of companies we invest in have great products, great NPS scores, great retention scores.”

Retaining Customers

Related to resistance from the sales team is often a fear that customers will be scared off by a higher price point. And the thought of being the one to share that increase can be daunting.

But once again, belief in the product is a great weapon in this situation.

“What are our product managers and heads of engineering and engineering talent doing? They’re continuing to invest in that product,” Zheng said. “Hopefully we’re able to convey this to the sales team who have to be at the front line to convey it to the customer of like these are not price increases for the sake of price increases.”

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Value-Based Pricing

The beauty of value-based pricing is that businesses attract customers who are willing to pay for a superior product. Portfolio companies owned by ParkerGale and like-minded private equity firms aren’t courting bargain hunters anyway.

Zheng said that this high-quality approach “justifies what we think this product actually provides to you. And if you were really looking for the cheapest price, then we wouldn’t be having this conversation because that’s usually not the positioning that we have.”

CASE STUDY: Strategic Sales Execution for Healthcare Services Company

After all, if the business is working so hard to create a quality product or service, why wouldn’t they expect customers to be willing to pay more?

“We’re going and improving the products and updating the modules and features and all these things,” Zheng said. “Are we on the flip side also making sure we’re getting that value-based pricing from our customers?”

Knowing that pricing isn’t the top priority for their target customers gives portfolio companies more flexibility, dousing the fear of scaring them off.

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Data-Driven Pricing Strategies

No matter how much a business believes in its products and services, it can’t blindly adjust its prices and hope for the best. They must make data-based decisions.

One way to do this is by paying close attention to macroeconomic factors.

“We’re thinking a lot more intentionally about pricing and making sure that we’re not just staying flat, we’re looking at what’s going on in the market,” Zheng said.

There are other metrics that can influence a pricing strategy, though. According to Zheng, NPS scores and retention data are strong indicators of whether a business has a “very solid product.”

READ MORE: How To Analyze Sales Data: Tools, Examples, KPIs

For private equity firms, much of this crucial research can be done before a company is ever acquired.

Zheng said that during the commercial due diligence phase, ParkerGale often deploys voice of customer studies to learn what are customers’ top three key purchase criteria. Pricing seldom makes the list.

“Especially when we’re selling enterprise software, these are mission-critical tools and products,” Zheng said. “The customer is not looking for the cheapest one.”

READ MORE: What is Commercial Due Diligence?

In-depth analysis can also help companies learn when they have taken their increases too far, allowing them to adjust back down.

“I would argue if you’re never losing on price, then you’re priced too low. You should be losing a certain percentage of your deals on price,” Zheng said. “But if you can collect the data on the other side, if you’re doing win-loss analysis and calls like that, then you should be able to say, ‘OK, we are hearing now that we have enough actual data, not anecdata, to say we are actually losing on price too much, and so therefore we need to adjust.’”

READ MORE: Voice of Customer Metrics, KPIs, Analytics

Benefits of Pricing Consultants

As meticulous as private equity firms and other top business leaders are about their companies, a world-class pricing strategy often requires world-class help.

Mooney mentioned how underutilized pricing resources are, but that’s not because they’re in short supply.

The Business Builders’ Network is full of pricing experts who work on an industry-specific basis. They know the questions to ask, the data to analyze and the levers to pull to make sure you’re setting prices with confidence.

Listen to the Full Episode

“We’re in contact with the service providers in our network nearly every day,” Co-Head of Research and Operations Keenan Kolinsky said. “Before clients even reach out, we already know which providers will likely be best suited for their pricing project. That way, we can hit the ground running as soon as we scope a client’s need.”

These third-party resources are experts in segmenting customers, identifying value drivers, developing measurement tools and pricing structures, conducting sensitivity analyses and more.

They’re on standby to help you determine your target customer base’s key decision factors, willingness to pay, preferences and perceptions.

Lastly, they’ll present this information – with speed and accuracy – in a way that’s actionable for your business.

How BluWave Works

Contact our research and operations team today, and tap into the same invite-only network that the world’s best PE firms – from ParkerGale and beyond – use to set their pricing strategies.

Within a single business day, you’ll be connected to a shortlist of options that will be chosen for your exact situation and vertical.

What Makes a Commercial Due Diligence Firm ‘Specialized’?

October 11, 2023 Brad Gerick

Private equity firms face fierce competition for new deals. Even when the economy is strong, there could be dozens of groups vying for the same target.

When the deal market is stagnant, though, it can seem impossible to find a viable acquisition, let alone have the winning bid.

BluWave founder and CEO Sean Mooney encountered this challenge in his nearly 20 years in private equity.

“As the competitive tension of supply and demand intersected in private equity with more and more capital under management, chasing the same supply of deals was causing pressure for me to say, ‘I can’t just be a market taker anymore,’” Mooney recently shared. “’The surplus is being skimmed. I have to see something that no one else can see.’”

Mooney since started the Business Builders’ Network to help other leaders solve this very problem. He recently spoke with Andrew Joy, partner at Hidden Harbor, about how PE firms use specialized commercial due diligence providers to cut through the noise and rise above competitors.

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So how do the world’s top private equity firms distinguish themselves in this cutthroat environment? One way is through commercial due diligence.

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What is Specialized Commercial Due Diligence?

Specialized commercial due diligence can only be performed by firms that have deep experience in the target’s specific industry and are ready to go well below the surface to provide exclusive insights.

At a high level, a commercial due diligence project usually involves looking at a company’s market size, its total addressable market, conducting a competitive analysis and performing a voice of customer study.

READ MORE: What is Commercial Due Diligence?

“The goal of commercial due diligence is to validate the story that the target’s telling or to identify the reality of the marketplace out there so they can make an informed decision,” according to Don Jenkins*, the founding partner at one of the specialized diligence firms in the BluWave network.

While the details of the process are much more nuanced, a world-class CDD firm will be able to get up to speed faster, give private equity firms a deeper understanding of the business and equip them with a significant competitive advantage over other PE firms that conduct more general due diligence.

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Looking Beyond the Acquisition

When PE firms consider buying a business, they aren’t just thinking about its present-day value. They’re also evaluating what an exit will look like and how much value they can create long-term once the company is no longer in their hands.

That’s why it’s so important for them to thoroughly investigate every potential target. Mooney said that PE firms have moved beyond a “trust but verify” mindset and are looking even longer term than they may have been a decade ago.

“You’re not building for the next five [years] because if nothing else, if you’re going to sell to the next person, there’s got to be some cream left to build it,” Mooney said. “If you’re only thinking three to five years ahead, you’re playing a chess versus checkers game.”

Specialized CDD Resources

Differentiated Data

“As information and data have become more commoditized and more accessible, it’s becoming harder and harder to really find areas where you have a competitive advantage,” Joy said. “We like to say, ‘What’s our angle on this target or deal?’”

Mooney noted that investment banks do a great job exposing as much value creation as possible within a company. But PE firms that don’t dig deeper are going to be working from the same perspective as everyone else.

READ MORE: Data Consolidation: Benefits, Challenges, Processes

“The undifferentiated commercial diligence firm is calling the expert networks to get the insights about the markets that they’re sharing,” Mooney said. “Odds are if one over the other is not using a specialized group that sees something that the expert networks don’t, everyone’s getting beta. They’re spending hundreds of thousands of dollars on the sell-side study, which is calling two or three market network expert networks.”

Joy said that when PE firms use the same tools as everyone else, “that’s just the ante to get into the game.”

He added: “You really have to then figure out how this target or this opportunity fits within an angle that you can play. Whether that’s operationally, whether that’s commercially, so that you can justify to your committee why we think this asset is more valuable and we’re going to be the winning bid.”

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Closing with Confidence

When commercial due diligence is done right, private equity firms can make acquisitions with confidence.

“By the time we close on a transaction, we have a really strong hypothesis around what are the value-creation levers that we are going to pull over our whole period to create outsized market returns,” Joy said. “And that’s informed by the commercial due diligence.”

When Hidden Harbor is deciding on a target, Joy said they like to ask where the company’s right to win is, and how they can get there.

“It’s amazing to see sometimes and that when you do a full cycle of investment from closing to selling and you look back and you say, ‘What were the three biggest value-creation drivers of our return?’ And you’re able to say, those were the three that we identified in diligence. That’s pretty powerful to have that amount of conviction and be right about that and being validated.”

BluWave has a close relationship with a deep bench of world-class, specialized commercial due diligence providers.

Each one has been vetted before joining the invite-only network and is re-vetted before they’re matched with private equity firms.

When you contact our research and operations team, they’ll connect you with a shortlist of service providers – with industry-relevant experience – in less than 24 hours.

Start your project today to get the differentiated insights that a specialized commercial due diligence provider can uncover.

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*Privacy is important to us. While the source and company name have been changed, these are real quotations from a real service provider in the BluWave Business Builders’ Network.

Manufacturing Momentum: Challenges, Opportunities in the Modern Landscape

October 10, 2023 Brad Gerick

Manufacturing businesses are faced with evolving challenges, especially amid an uncertain economy, constantly pressured from different angles by policy decisions and global events. BluWave sees this every day in the projects it supports for hundreds of private equity firms and thousands of businesses.

Whether in human capital, operations, growth strategy or technology, today’s business leaders have their hands full.

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In a recent webinar, Co-Head of Research and Operations Keenan Kolinsky discussed with Product Manager Ryan Perkins the challenges and opportunities in this industry.

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The Rising Importance of Human Capital in Manufacturing

The manufacturing sector was once driven primarily by machinery and raw materials. But now it’s recognizing the importance of its most valuable asset: people.

In fact, 74 percent of manufacturers say that “attracting and retaining a quality workforce” is a top challenge, according to the National Association of Manufacturers (NAoM).

Interim executives have emerged as a pivotal solution in this landscape. These temporary business leaders bridge critical leadership gaps, ensuring that companies don’t lose momentum during transitions.

“Interim executives can help businesses keep their foot on the value creation pedal,” Kolinsky says.

Their role is especially crucial in a volatile economic environment where leadership vacancies can’t be left open for extended periods.

But it’s not just about filling gaps. The recruitment process itself is undergoing a transformation. The emphasis is shifting from generalist recruitment approaches to specialized, industry-specific strategies. Manufacturers are realizing that to drive growth and innovation, they need the right people in the right roles, making executive searches a top priority, too.

Manufacturing Resources for Your Business

Operational Excellence: The Backbone of Manufacturing Success

Turning toward a more traditional problem, nearly half of manufacturers identified supply chain issues as a top challenge, per the NAoM. Even with the peak of the COVID pandemic disruption behind us, this issue persists.

“With manufacturers…experiencing a variety of economic and even geopolitical pressures, manufacturing operations and supply chains simply have to be tighter than ever to achieve desired margins and outcomes,” Kolinsky said.

In response, many manufacturers are turning to expert third-party resources to optimize their supply chains. From right-sizing inventory to reducing lead times and optimizing supplier networks, the focus is on efficiency, cost savings and performance.

Beyond the supply chain, there’s a broader push toward operational excellence. Lean Six Sigma principles, rooted in the Toyota production system, are being adopted to streamline processes, identify bottlenecks and drive efficiency. The goal? Faster, more efficient production with greater precision.

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Strategizing for Growth in a Competitive Landscape

A weaker domestic economy can poses unique challenges. During those times, growth strategy becomes the north star guiding manufacturers. But how do they chart a course for growth amid such turbulence? The answer is data-driven strategies.

“Markets shift often and they shift quickly,” said Kolinsky, who emphasized the importance of real-time insights. “Base your strategy or plan for growth on current market data and dynamics.”

READ MORE: Analytics, Data & AI Resources

By leveraging data analytics and visualization tools, manufacturers can gain actionable insights, track KPIs and make informed business decisions.

With the advent of more accessible artificial intelligence tools, many businesses in the manufacturing industry and beyond have been focusing on essential pre-cursor activities focused on data hygiene. These will lay the groundwork for a more seamless integration once they’re ready to use AI to accelerate growth.

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Embracing Technology: The Future of Manufacturing

The digital revolution is reshaping the manufacturing landscape.

According to Alithya, 43 percent of manufacturers came into 2023 planning to increase their year-over-year spending on technology. it’s clear that the industry is gearing up for a tech-driven future.

“The manufacturing industry is really digitizing rapidly and in more ways than one,” Kolinsky said.

From IT strategy to system selection and implementation, manufacturers are recognizing the need to align their technology tools with broader business objectives.

But it’s not just about adopting the latest tech solutions. Effective change management is crucial. As manufacturers transition to modern systems, they must ensure that their teams are well-equipped and trained to leverage these tools to their fullest potential.

BluWave is here to help you connect with best-in-class, niche-specific manufacturing resources to help with human capital, operational excellence, growth strategies, technology and more.

Contact our research and operations team to scope your need and get quickly connected with  the service provider you need in less than one business day.

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What is Commercial Due Diligence?

September 27, 2023 Brad Gerick

Private equity firms perform commercial due diligence (CDD) to evaluate the growth and profitability of a potential target acquisition.

A process that was once reserved for large cap funds with extra capital to spend on evaluating the soundness of the investment, CDD is quickly becoming a necessary standard operating procedure for all proactive PE funds.

WATCH: Due Diligence Webinar Replay

“Each deal’s different and may require a different slate of providers to get the most out of each diligence phase or diligence stream,” says Keenan Kolinsky, head of research and operations at BluWave.

Private equity firms have discovered that in order to drive alpha in a sea of beta, smaller, more specialized commercial due diligence providers can provide them with more unique insights quicker. 

What is Commercial Due Diligence?

Commercial due diligence is a systematic evaluation of a target company’s commercial viability before making an investment decision. It’s an extremely thorough process that, when done well, leaves no stone unturned before papers are signed.

“Commercial due diligence is a term of art for a market study. It’s typically provided by market strategy firms,” BluWave founder and CEO Sean Mooney shared on a recent webinar. “It is standard operating procedure by the best private equity investors in the world.”

It comes as no surprise, then, that CDD is consistently No. 1 due diligence category in the BluWave Activity Index.

That’s why the invite-only network of third-party resources is loaded with world-class diligence providers, such as Don Jenkins* of CommDil Inc.

“When you think about commercial due diligence, there’s often a fairly typical set of objectives,” Jenkins says. “Those will include understanding the market size, how big is the market, how is it segmented, what are the key segmentations or different types of businesses that constitute that market.”

From start to finish, it usually takes weeks, if not several months, depending on the target’s size and complexity.

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Specialized Due Diligence

Any consultant can provide intelligence on a target’s total addressable market, prospects for growth, competitors, risks and other vital information through initial industry research. But specialized consultants with pre-existing industry knowledge don’t have to waste their time to gain a sense for the industry.

Instead, they can provide a heightened sense of value by using their base knowledge to dig deeper and therefore provide more in-depth insights in the same amount of time.

READ MORE: What is Buy-Side Commercial Due Diligence?

These steps give investors a deeper understanding of the target company’s business model, financial performance, competitive landscape, and operational and legal risks.

A benefit of specialized commercial due diligence providers is their ability to get up to speed faster. Because they aren’t being run to with projects across various industries, their recent experience primes them to hit the ground running. Generalist firms, on the other hand, will run expert network calls to get smart on an industry.

“We have thousands and thousands of projects, tens of thousands of their quals built into this cognitive engine that we’ve built, and then we’re constantly checking with them on a capacity,” Mooney shared on the webinar of BluWave’s matchmaking process. “By the time the PE firms calls, we already know who they need, why they need it, what their quals are, what their availability is, and then have the ability to compel them to bring the A team to our clients.”

WATCH: CDD Webinar Replay

How is CDD Performed?

Kolinsky says there are several variable diligence factors to consider, “such as the target’s industry, the deal size, target technology or operational nuances, timing and more.”

BluWave supports private equity clients by connecting them with the diligence providers whose functional capabilities, expertise and experience account for these different factors.

Here are the four key steps the service providers in the BluWave-grade network take when performing commercial due diligence:

1. Comprehensive Market Analysis: Size

This is where the target company’s market position as well industry trends and growth potential are analyzed.

“We’ll be doing market forecasting, understanding the headwinds and tailwinds that affect growth,” Jenkins says. “We’re looking at trends that exist out there, whether it’s technology trends, regulatory trends, just other emerging competition.”

On the commercial due diligence webinar hosted by BluWave, Andrew Joy of Hidden Harbor talked with Mooney about the importance of looking beyond a private equity firm’s holding period when evaluating a business.

“It’s answering the fundamental question of, ‘What do we believe this business will grow at over our whole period and beyond?'” Joy said. “[The scope is] more 10, 20 years because just as important as the next five years’ growth is what matters just as much as the growth beyond that as you think about your exit and the exit multiple.”

2. Comprehensive Market Analysis: Total Addressable Market

Here’s how Scott Bellinger, BluWave’s head of sales, defines this step:

“Of the overall market, how much is currently addressable by the target? What else could they do to get into new markets and increase their total addressable market?” Bellinger says.

He added that businesses that already have a high penetration rate may need for new markets if they want to continue to grow.

Joy shed more insight on this stage in the webinar.

“By the time we close on a transaction, we have a really strong hypothesis around what are the value creation levers that we are going to pull over our whole period to create outsize market returns,” he said. “What adjacent markets should this target enter…and how do you capitalize on that?”

3. Competitive Analysis

Bellinger says there are key questions to answer at this stage: “Who does your business compete against? How are they viewed in the market against competitors? Who else has taken up market share? What’s the differentiation between your business and others?”

Jenkins agrees, and noted that this is a fundamental part of hits firm’s commercial due diligence exercises.

“Typically we’re looking at understanding the competitive landscape that the target company is competing against, and how they’re positioned in terms of share and their offering, and how they position themselves in the marketplace,” Jenkins says.

Read More: Hire the Right Temporary CFO

4. Voice of the Customer

Finally, PE firms and other acquirers need to know how current and potential future customers view the target business.

That’s why Jenkins says “there’s usually a voice-of-the-customer piece.”

There are many ways this can be done, but getting first-hand information from clients and customers is essential to understanding the business. Expert third-party firms will not only know which tactics to use for specific industries, but also how to connect with the customers in a meaningful and insightful way.

READ MORE: 5 Steps To an Effective VoC Strategy

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We have recently seen many firms turn to more specialized providers due to the valuable insights gained.

In times where other PE firms are struggling to get the right information on the timeline they need, equipping yourself with unique data quickly will provide you with competitive edge.

“The deal process is laborious and it’s fatiguing, but really taking the time upfront to find the right group that will answer the critical questions that you’re really have to will pay dividends,” Joy said on the webinar. A lot of groups that’ll say yes to the project, but the ones that will provide real value is a lot smaller.”

The expertly vetted service providers in the BluWave network have performed countless commercial due diligence analyses for hundreds of PE firms.

“In private equity, one size does not fit all,” Kolinsky says.

We vet each resource before they’re admitted into the network, and again before connecting them to you. After your initial scoping call with our research and operations team, you’ll meet the two or three “best fits” within a single business day.

Tell us about your project now, and we’ll get started with selecting your tailor-made solution.

WATCH AGAIN: Commercial Due Diligence Webinar

*Privacy is important to us. While the source and company name have been changed, these are real quotations from a real service provider in the BluWave Business Builders’ Network.

Understanding Voice of Customer: Metrics, KPIs, Analytics

August 22, 2023 Brad Gerick

Customer-centricity is a business imperative, which makes understanding the voice of customer (VoC) critical to success. VoC insights provide a deep understanding of customer needs, preferences and pain points, guiding the strategic direction of a business.

The value of VoC, however, isn’t merely in its collection, but in the ability to quantify it using the right metrics, KPIs and analytics. By focusing on the metrics below, companies can track progress, identify trends and make data-driven decisions.

Not employing these metrics effectively could lead to misguided strategies and missed opportunities, underlining the need for expert advice on this critical subject.

Third-party resources, such as those BluWave connects you with, offer businesses the expertise to measure, analyze and make strategic use of VoC data. Having access to such proficiency could mean the difference between having a wealth of customer data and leveraging it for business growth. Let’s explore the potential of VoC data.

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Essential Voice of Customer (VoC) Metrics and KPIs

Understanding and implementing standard VoC metrics and KPIs is the first step toward a comprehensive customer-centric strategy.

READ MORE: Voice of Customer Methodologies

Keenan Kolinsky, BluWave’s co-head of research and operations, says working with specialized third parties can uncover insights the company wouldn’t be able to on its own.

“Before determining your growth strategy or any commercial strategy, you should get targeted insights from your customers and potential customers,” he says.

Sometimes clients will have very specific questions they want included in the scope. Other times they will look to the third party to advise.

Net Promoter Score (NPS)

NPS serves as a barometer of customer loyalty and satisfaction. It is determined by asking customers a single question: “On a scale of 0-10, how likely are you to recommend our company/product/service to a friend or colleague?” NPS provides valuable insights into your customers’ overall perception of your brand and their willingness to endorse you to others.

Customer Satisfaction (CSAT)

CSAT is a key metric that measures customer satisfaction with a specific product or service or an overall experience with your company. Typically measured on a scale, CSAT helps businesses understand how well they meet or exceed customer expectations, guiding improvements in product or service offerings.

Customer Effort Score (CES)

CES gauges the ease of interaction with your company. It measures the effort a customer must exert to obtain a product or service, resolve an issue or get a query answered. Low CES indicates smooth interactions and processes, directly contributing to higher customer satisfaction and loyalty.

Customer Loyalty Index (CLI)

CLI is a composite metric that gauges multiple dimensions of loyalty, including repurchasing, upselling and recommendation likelihood. A high CLI indicates strong customer loyalty, suggesting repeat business and customer advocacy.

Customer Lifetime Value (CLV)

CLV predicts the net profit associated with the entire future relationship with a customer. It helps businesses allocate resources efficiently for customer retention and acquisition strategies.

While business may be able to answer some of these questions on their own, Kolinsky says getting an outside perspective can be invaluable.

“Sometimes clients will have very specific questions they want included in the scope. Other times they will look to the third party to advise,” he says. “One of the insights they’re looking to get is buying drivers. What influences that customer to purchase that service or product?”

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Advanced Voice of Customer (VoC) Metrics

With a strong foundation in place, businesses can progress to more advanced VoC metrics that delve deeper into customer sentiment and behavior.

Learning Opportunities: Improving Products Based on Feedback

This metric identifies specific areas where your product or service could improve based on customer feedback. By proactively spotting and addressing these opportunities, you enhance your offerings and customer satisfaction.

Repurchase Ratio: Evaluating Customer Retention

The Repurchase Ratio measures the percentage of customers who have made repeat purchases. This metric is critical for assessing customer loyalty and informing retention strategies.

“Would You Miss Us?” (WYMU): Assessing Customer Dependency

WYMU assesses the extent of customer dependency on your products or services. High scores indicate significant customer reliance, which is indicative of a strong customer-business relationship and often results in brand loyalty and advocacy.

READ MORE: What is Voice of the Customer?

Integrating VoC Metrics into Your Strategy

Accumulating VoC metrics is just the beginning; integrating these insights into your business strategy is where the real value lies. A tool that proves vital in this integration process is the Customer Journey Map, a visual representation of your customers’ experiences across all touchpoints. A well-constructed journey map can guide you on where to collect VoC data, adding to your voice of customer strategy.

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Amplifying Results with Voice of Customer Analytics

VoC metrics and KPIs provide vast amounts of data, but it is the role of VoC analytics to interpret this data and glean actionable insights. Analytics facilitate the understanding of complex customer behaviors and sentiments, allowing businesses to make strategic decisions that drive customer satisfaction and business growth.

Companies often find interpreting and actioning VoC data a complex task, calling for specialist expertise. BluWave can connect you with an exact-fit service provider to navigate this complexity and help you amplify your VoC strategy, based on proven voice of customer methodologies.

Focusing on voice of customer metrics, KPIs and analytics is not just a best practice, but a necessity. They offer quantifiable measures to track progress, understand customer behavior and preferences and make strategic decisions that lead to enhanced customer satisfaction and business growth.

Looking to strengthen your VoC strategy with expert third-party resources? Get in touch with BluWave today. Our dedicated research and operations team will connect you with an exact-fit service provider to aid your journey to customer-centric growth.

Professional Healthcare Recruiters: Specialized Human Capital Resources

July 3, 2023 Brad Gerick

The healthcare industry is in a constant state of flux. It’s a field that requires a dedicated workforce to manage patient care effectively.

With the growing demand for healthcare services, the need for specialized professional healthcare recruiters has never been higher. Especially in areas such as multi-location healthcare services and chief medical officer searches, both on the clinician and corporate side.

“Specialized recruiters will not only know the subset of candidates really well,” says Scott Bellinger, BluWave’s co-head of research and operations, “but they’ll also understand what candidates are relative for certain size companies.”

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We’re going to explore why a people expert with industry experience is essential for health and medical organizations.

Quality of Earnings

Benefits of Working with a Professional Healthcare Recruiter

Healthcare providers save time and money when they work with recruitment experts. An experienced talent leader will have access to a large pool of candidates and can quickly identify the most qualified applicants for your specific need.

They know how to guide employers through the hiring process, from defining the job description to negotiating compensation and benefits.

CASE STUDY: Chief Medical Officer Search for a Healthcare Services Firm

“A specialized provider will be able to more quickly identify and recruit candidates,” Bellinger says.

Job seekers also benefit from working with professional healthcare recruiters. They can match their skillset and experience to the ideal opportunity so that both sides feel like they win in the end.

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What to Look For

When selecting a specialized recruiter in the healthcare industry, it’s important to consider their experience, expertise and personalized attention to your needs.

Look for a recruiter who has experience in your industry, as well as a deep understanding of the recruitment process. A good recruiter should also have the skills to provide personalized attention to your needs, offering tailored advice and guidance.

CASE STUDY: Maintaining Rapid Healthcare Services Growth with Specialized CFO

It’s also important to work with a recruiter who stays up-to-date with the latest industry trends, compensation and benefits.

“When you work with specialized healthcare recruiters, they’re focused on serving the middle market and their network of candidates reflects that,” Bellinger says.

Healthcare Industry Resources

In today’s labor market, finding the right job or candidate can be a daunting task. That’s why professional healthcare recruiters exist, and why they are such an important resource for both job seekers and healthcare providers.

BluWave has the best specialized recruiting resources in healthcare on standby. Our expertly vetted network has what you need on standby before you even contact us.

Set up a scoping call today with our research and operations team and get presented with two or three best-fit options in less than one business day.

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How BluWave Helps Business Builders

May 21, 2023 Brad Gerick

What does BluWave do? Who works there? How can it help me grow my business?

Existing and prospective clients often ask this – whether directly to us or to industry peers – about the BluWave Business Builders’ Network.

Today, we’re launching a new BluWave.net, designed to answer those burning questions while more efficiently getting you the resources you need.

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“We built our new website to improve our clients’ user experience, make it easier to navigate and more clearly articulate the things we do for our private equity and corporate clients across different use cases,” BluWave CEO Sean Mooney says. “The new website also makes it much easier and more seamless to do things like start a project and connect with our customer coverage team members.”

Some of the new features include:

Filters

Whether you’re at the Due Diligence, Value Creation or Prep for Sale stage, we have real-life case studies, informed blog posts and expert content to support you. Learn more about how our expertly vetted service providers can help your private equity firm, portfolio company or private or public business, no matter what industry you’re in.

Search Functionality

Quickly access resources related to your niche-specific need by using the search bar at the top of the site.

“One of the great things about BluWave is that our network covers a lot of ground for business builders and their needs. The challenge is that it can be difficult to concisely cover all the things we do for private equity and corporate customers,” Mooney says. “I’m excited about the enhanced search functionality that will help our clients more easily navigate areas of interest.”

New Team Pages

Meet the leadership and learn more about the experts at BluWave. Click into any of the individual profiles on the page to get to know us better or contact us directly.

BluWave’s head of client coverage is excited about how the business builders we work with every day will benefit from these improvements.

“Our primary focus is to ensure that our new website is relatable to our growing client base with our expansion into new markets,” Director and Head of Client Coverage Scott Bellinger says. “With an emphasis on speed and ease of use, our revamped website offers a seamless experience for visitors allowing them to gather information or fast-track directly into an engagement.”

BluWave’s marketing team spearheaded the months-long effort to launch the new site. Senior Director of Marketing Kyle Johnson says:

“The launch of our new website is representative of our continued focus to deliver the best experience to everyone that makes the BluWave network – the world’s best business builders and our best-in-class specialized service providers – what it is.”

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M&A Integration Timeline: 10 Keys To Success

May 15, 2023 Brad Gerick

Navigating a merger or acquisition is a complex, multistage process that requires careful planning, strategic decision-making and effective execution. Understanding the timeline and key phases can significantly affect success, minimizing disruption and maximizing potential synergies.

Let’s look at an overview of a typical M&A integration timeline, breaking down each phase into clear, actionable steps. From pre-merger planning to ongoing post-merger optimization, we’ll explore each phase in detail, offering insights that can help private equity firms and businesses better manage their M&A processes, align teams and objectives and ultimately achieve their strategic goals.

“Instead of hoping that all the pieces will simply fall into place once a merger gets underway, top PE firms use specialized PE-grade merger integration advisors from BluWave’s Business Builders’ Network to help guide and keep portfolio company acquisitions on track,” BluWave CEO Sean Mooney says. “These merger integration experts know what steps need to be taken and when they need to be taken in order for an acquisition to live up to its full potential.”

ALSO SEE: Merger Planning & Integration: Best Practices for PE Firms

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1) Pre-Merger Planning and Strategy: Even before the deal is official, the two merging entities should work together to create a vision for the combined company. This involves defining the strategic objectives of the merger, such as expanding market share or diversifying offerings and identifying potential synergies. Thorough planning during this phase can lay a solid foundation for a successful merger.

“Although mergers can help companies create value very quickly, they can actually have net negative effects – from clashes between newly integrated teams to a lack of alignment on core objectives,” Mooney says. “To minimize these risks companies should use expert third-party resources to ensure that they’re accounting for potential misalignments and identifying areas where they can build on shared strengths with their partners in the pre-merger phase.”

CASE STUDY: Operations Integration: Industrial Park Carveout

2) Due Diligence: This is a crucial phase where both companies conduct thorough evaluations of each other’s financials, legal standing, market position and more. It’s a rigorous process that helps uncover potential issues that could affect the merger, such as legal disputes, financial discrepancies or operational inefficiencies. The findings from this phase can significantly influence the terms of the deal.

READ MORE: What is Commercial Due Diligence?

3) Integration Planning: Once the merger is confirmed, detailed plans for combining the businesses should be developed. This includes plans for integrating technologies, processes, personnel and more. The objective is to ensure a smooth transition with minimal disruption to ongoing operations.

4) Communications Planning: Proper communication is key during a merger. A comprehensive communications plan should be developed to manage internal communications with employees and external communications with stakeholders, customers and the public. Clear, timely communication can help manage expectations and reduce uncertainty during the merger process.

“During any major shift of change, people are often fearful of what this means for their personal and professional futures,” Mooney says. “By offering insight into what is happening immediately after you close your transaction and sharing what will happen, even if it’s not what they want to hear, employees can embrace an integration with less trepidation. Be sure to promptly follow your communications with aligned actions.”

READ MORE: Hire an Interim CEO

5) Regulatory Approvals and Deal Closing (Day One Readiness): This phase involves obtaining necessary regulatory approvals for the merger. Once all approvals are secured, the deal can officially close. On “Day One,” the merged entity should be ready to operate as a single unit, which requires significant preparation.

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6) Integration Execution: This phase involves implementing the integration plans developed earlier. It’s a complex process that requires careful management to ensure that all elements of the businesses are combined effectively and efficiently.

7) Change Management: Mergers often bring significant changes and managing these effectively is crucial. This can involve cultural integration, operational changes or strategic shifts. Proper change management can help to minimize disruption and ensure that all employees are aligned with the new direction.

8) Talent Management and Retention: Mergers can create uncertainty among employees and it’s essential to identify and retain key talent during this time. This involves clear communication about changes, reassurance about job security and potentially, adjustments to roles and responsibilities.

READ MORE: Hire an Interim CHRO

9) Synergy Realization: After the merger, the focus shifts to realizing the synergies identified during the pre-merger planning phase. This could involve cost-saving measures, leveraging combined resources for growth or other strategic benefits. Tracking and measuring these synergies is crucial to evaluate the success of the merger.

10) Ongoing Integration and Optimization: The final phase of a merger is an ongoing process. The newly merged entity should continually evaluate its operations, looking for ways to streamline processes and pursue synergies. This process can improve efficiency and profitability.

“If you’re in a leadership role, don’t pass off important steps of the process to lower-level managers, particularly with more nuanced or difficult changes. Lead by example and show that you have bought into the task at hand by holding others and yourself accountable for the outcomes,” Mooney adds. “Make acquisition integration part of your leadership meetings and make sure the buck stops with a key leader in your organization who can catalyze buy-in and action.”

More Merger Planning & Integration Resources

Mergers and acquisitions are complex undertakings, requiring a comprehensive understanding of every stage of the process and an ability to navigate potential pitfalls. From the initial vision and strategy phase to ongoing integration management, each step is crucial for driving value creation and achieving strategic objectives.

At BluWave, we understand the intricacies of the M&A process and the importance of ensuring seamless integration. With our deep bench of PE-grade, pre-vetted merger integration resources, we can connect you with the expert you need based on your unique industry, budget and other parameters. Whether it’s conducting due diligence, crafting effective communication strategies or managing and retaining talent during the transition, we can help you navigate the process with confidence and precision.

CASE STUDY: Revamping Market Positioning, Expanding with M&A

In the world of M&A, leveraging third-party resources and expertise can make the difference between merely combining two entities and truly creating a new entity that’s greater than the sum of its parts. Contact our R&O team and let us help you turn your M&A vision into a reality.

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10 Cloud Migration Use Cases: What is it for?

April 27, 2023 Brad Gerick

What is Cloud Migration Used For?

Cloud migration is the process of moving applications, data and other IT resources from an organization’s on-premises infrastructure to a cloud computing environment. This environment could be a public cloud, such as Amazon Web Services (AWS) or Microsoft Azure, or a private cloud, which is a dedicated environment for a single organization.

This complicated process goes much smoother with the help of an expert third-party resource.

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Let’s look at 10 different reasons your business might be ready to get help with cloud migration.

Cloud Migration Use Cases

Before embarking on a cloud migration project, organizations need to develop a business case that outlines the costs, benefits and risks of the migration. This can help organizations make an informed decision about whether to proceed with the migration and how to prioritize their migration efforts.

READ MORE: How To Extract Data from ERP Systems

Here are some use cases for which cloud migration might make sense for a company:

  1. Relocating an organization’s data, applications, and workloads to a cloud infrastructure: The most fundamental use case for cloud migration is to move an organization’s IT assets to a cloud infrastructure. This can reduce IT costs, improve performance and scalability and increase flexibility and agility.
  2. One-time massive data migration: Organizations may need to migrate large amounts of data to the cloud as part of a one-time project, such as a data center consolidation or a merger and acquisition. This can be a complex and time-consuming process, but it can help organizations simplify their IT infrastructure and reduce costs in the long term.
  3. Continuous on-premises data migration: Some organizations may choose to migrate their data to the cloud gradually over time, rather than all at once. This can help avoid disruptions to their operations and minimize the risk of data loss or corruption.
  4. Continuous streaming data ingestion: Organizations that generate large amounts of data in real-time, such as social media companies or financial institutions, may need to continuously ingest that data into the cloud for processing and analysis. This can require specialized tools and infrastructure to handle the volume and velocity of the data.
  5. Disaster recovery and business continuity: Cloud migration can help organizations create robust disaster recovery and business continuity plans by enabling them to replicate their data and applications across multiple cloud regions or providers. In the event of an outage or disaster, the organization can quickly switch over to the backup environment in the cloud.
  6. DevOps and testing: This process can also help streamline development and testing processes by providing on-demand access to cloud-based infrastructure and resources. This can help teams quickly spin up test environments, automate testing processes and reduce the time to market for new products and features.
  7. High-performance computing: Organizations can use cloud migration to run high-performance computing (HPC) workloads that require significant compute resources. By leveraging the elastic compute capabilities of the cloud, businesses can scale up and down their HPC environments as needed to meet changing demand.
  8. Big data and analytics: Cloud migration can be leverage the scalability and processing power of the cloud to run big data and analytics workloads. This can help organizations quickly process and analyze large datasets, gain insights from their data and make better-informed business decisions.
  9. Internet of Things (IoT): Cloud migration can enable companies to manage the large amounts of data generated by IoT devices. By leveraging cloud-based analytics and processing tools, organizations can quickly ingest, process, and analyze IoT data to derive insights and improve their operations.
  10. Digital transformation: By moving to the cloud, organizations can adopt new cloud-based services and technologies, such as machine learning, artificial intelligence and server-less computing, to innovate and drive business growth.

READ MORE: Platform Modernization: App, Software Upgrade

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The invite-only Business Builders’ Network is full of IT professionals who specialize in helping private equity firms, portfolio companies and private and public companies with cloud migration.

With so much at stake, many companies are turning to expertly matched third-party resources to walk them through this process. Our research and operations team works hand-in-hand with the top IT strategy firms in industries including healthcare, manufacturing, technology and more.

When you’re ready to connect with a niche-specific provider to explore and enhance your cloud migration strategy, we’ll be ready to make tailor-made introductions within a single business day.

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