Customer Type: PE-Backed Companies

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:

  1. 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.
  2. 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.”
  3. 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.”
  4. 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.”
  5. 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.

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

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.

Why Your Company Needs a Fully Realized Digital Marketing Strategy

July 17, 2018 Sean Mooney

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

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

Here are a few things you should know:

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

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

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

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

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

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

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

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

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

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

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

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

3 Ways to Increase Your Company’s Value

June 6, 2018 Sean Mooney

After nearly 20 years in private equity, I appreciate how hard it is to build and grow businesses in a constrained environment.  Nothing is easy, but most things are possible with the right people and resources.

Top private equity funds regularly ask us about ideas to help drive growth and reduce costs.  Here are a few growth, organizational development, and cost reduction strategies that can be applied to build your business and drive value creation:

Reach 1,000s of customers at a click of a button:  Digital marketing is the most underused tool in the middle market: every business should be doing at least the basics (particularly in underutilized B2B markets).  This starts with good data (you should think of this as a business asset), requires market segmented content, and systems capabilities. It’s really hard, and expensive, to internally be good across SEO, paid search, content, email, PPC ads, etc.  You should outsource this to a middle market agency who will do this better and at lower cost than you can.  Committed digital marketing programs can lift revenues by more than 20%.

Rent “A” Players:  Sometimes it’s better to rent 10% of a bunch of A’s rather than own 100% of the B or C you can afford in your budget: the future of work is now (just ask some of the best younger workforce members who won’t work full time).  There are great variable resources that you can use across the functional areas of your organization to more optimally inform strategies and execute on your plans.  Use them.  Plus, if it is a one-time project, you often can get an add-back for it, enabling you to present stronger numbers when it comes time to sell your business.

Your costs are rising, you should be fighting it more: In the current world climate, all sorts of input costs are on the rise, from metal to plastics to fuel. Most companies (including very large ones), don’t have the internal expertise or the free resources to understand and aggressively combat today’s volatility. Bring in a specialized procurement group that lives and breathes in these markets to reduce costs, diversify supply chains, and/or hedge risks. While you’re at it, go after your indirect spend. If you’re not ready for a procurement group, at the very least you should be using plug and play Group Purchasing Organizations (GPOs). Expect some push back as the savings can be embarrassing and/or preemptively tap into rainy day savings buckets. However, when you apply a valuation multiple to the savings you’ll achieve, these tools are no-brainers.

Finding the superior groups isn’t easy. BluWave seamlessly connects you with the best vetted and private equity tested practitioners that specialize in your areas of need and fit your budget. We also make it remarkably easy on you: we don’t charge you anything to use our service.

Start talking with us about your needs today. Help is a call or email away.

How You Should Be Selecting the Right Service Providers

April 10, 2018 Sean Mooney

When used correctly, service providers can meaningfully improve the efficiency and productivity of your business and can dramatically help increase value. In a perfect world, your service providers work autonomously and efficiently to make universal improvements to your business.

But that’s not often the case. Service providers not only need the right capabilities, but also ongoing guidance to perform their tasks to maximum effect.

When done well, choosing and using the right service provider can profoundly impact due diligence and value creation.

Unfortunately, you’ve probably been doing it wrong.

We don’t mean it as an insult – it’s a common occurrence. There are so many service providers who simply aren’t the right fit for improving your business and increasing its value. Private equity (PE) funds, their portfolio companies, and independent companies need to critically examine service providers before hiring them, then carefully manage them to meet with success.

But how do you take that first step toward finding and choosing the right service provider? You learn about the problems or opportunities in the process, scope your needs, then purposefully move forward with the solutions.

The Fragmented and Fluid World of Service Providers
There are two ubiquitous problems when searching for and using service providers:

  1. It’s hard to know who is really good for the task at hand – No matter the industry, finding and vetting a qualified service provider is exponentially harder than finding just any service provider, and it’s going to take some time to get it right.
  2. Once you find out who can deliver, they change – Even the most well-qualified and experienced service provider is vulnerable to change; they may move upmarket, ask for higher fees, get acquired and clean house, or sell out of capacity right when you need them.

The service provider ecosystem is a complex web.  Within this web are great groups that can help you accelerate business growth and development.  But to achieve your goals, you have to accept no less than a grade-A fit for your business.

Calibrating Service Providers Around Capabilities
There are three essential baseline questions to ask about service providers when assessing:

  1. Do they do what I need? (Capability)
  2. Have they worked in this industry before? (Expertise)
  3. Can I afford them? (Budget)

If the answer to any of those questions is “no,” then you haven’t found the right fit. It’s essential to make sure the answer is “yes” before proceeding.

Capability
Dig around to find out if the service provider has done and has success with doing the job for which you plan to hire them – and be specific. Learn if they have handled tasks that match or closely match those that you expect them to handle, and get two sides of the story; ask them about their experience, and learn about the real-world result of that experience by speaking with their past and current customers of your choosing.

Expertise
It may not seem terribly important initially, but industry expertise helps your service provider skip many steps in the learning process (and avoids the expensive proposition of a service provider having to learn while they’re on the clock for you). The ability to tailor decision-making to the needs of a particular industry is invaluable, and you’ll need both the set of skills necessary to do so and the time and resources it would have taken to gain those skills.

Budget
Calibrate your budget with your choice of service provider. There are different service providers that are capable of executing well at different price points.  Beware of pushing a service provider at a higher price point to do work much below their typical rates as you’ll likely get sub-par focus and attention.  Instead, choose the best in class provider within your price range.  While there are of course tradeoffs that will be made between such price points, with a reasonable budget, you should be able to get and should expect an excellent outcome.

Getting a great result starts with answering “yes” to all 3 baseline questions around Capability, Expertise, and Budget. Accept no substitutes.

Managing Your Service Providers
Service providers need real-time management if you want to get a great return on your investment. Try these tips for getting the most out of your service provider

  • Create a system of consequences – Holding providers accountable means making sure they know what is expected of them and that their actions have a direct effect on your and their companies. You should track how they are performing over time, provide direct feedback, and only work with groups that consistently serve you and your peers well over time.
  • Manage them like a full-time equivalent (FTE) – It’s okay to check up on your service providers to ensure they are working diligently. Maintain reporting lines, communicate regularly, and treat them with mutual respect as you would a full-time employee.
  • Work as if they are part of the same company – Consider your outsourced service provider as another hire or set of hires that are in charge of a selection of your business’ process Keep them informed on issues they need to know about and include them as part of your company work ethic and culture.

When you trust a service provider, they should also be able to trust you to help guide them toward the tasks necessary to meet your goals. Related to guidance, there are two common mistakes that many PE funds, portfolio companies, and independent companies make when choosing and working with service providers:

  1. Broad mandates – If you’re not specific about what you want, service providers have to guess both your goals and how you would like tasks to be executed, which can lead to quite a bit of wasted time and money.
  2. Poor management – We can’t say this enough; service providers need to be actively managed as if they were employees of the company to truly shine

Growth and development is never a guarantee, but by carefully selecting your service providers, giving clear guidance, and holding them accountable, you will drive value creation with more speed and certainty.

Sound like a lot of work? We think so, too –we’re uniquely equipped and excited to handle much of this for you. BluWave team members utilize our extensive PE-tested network of comprehensively qualified service providers to analyze and help select the perfect fit for growing your companies.  We then hold them accountable for delivering excellent results for all of our private equity fund, portfolio company, and independent company customers. Contact us today for help with finding the best fit for your next service provider needs.