Service Provider Type: Merger & Acquisition Strategy Firm
Industry: Generalist
The Need
Reinvigorating Market Strategy and Exploring M&A Opportunities
A portfolio company sought help improving its market positioning and evaluating strategic M&A prospects within the HR SaaS sector. With a strong tech-focused approach, the firm aimed to identify adjacent markets and solidify its foothold through targeted acquisitions.
The Challenge
Navigating Complex Market Dynamics
The challenge lay in revitalizing the company’s market strategy. The client required a comprehensive analysis of their current positioning and an exploration of potential adjacent markets. Additionally, the portco sought guidance on devising a strategic M&A roadmap that aligned with their growth objectives and unlocked synergies.
How BluWave Helped
Strategic Insight and M&A Roadmap
BluWave connected the client with an M&A strategy firm well-versed in the HR SaaS industry. This partnership offered the portfolio company strategic expertise to analyze their current positioning and identify gaps. The specialized firm crafted a tailored plan for expansion into adjacent segments, including evaluating potential M&A targets. Weekly interactions with the investment team ensured alignment and effective execution of the strategy.
The Result
Empowering Informed Decision-Making
Through this collaboration, the client gained in-depth insights into their current market standing and potential growth opportunities. The M&A strategy firm’s expertise assisted the client in devising a strategic roadmap for M&A, considering tuck-in acquisitions and larger-scale ventures. This collaborative approach enabled the firm to make informed decisions, enhance its market presence and strategically leverage its investment for maximum impact.
The service provider was knowledgeable about the sector. They provided concrete action items and feedback. They also responded to feedback on the initial draft report to provide a final project in-line with expectations.
Filling Critical Sales Positions to Drive Expansion
A prominent private equity firm in the lower-middle market sought to rapidly fill two pivotal sales roles for a portfolio company in the manufacturing industry. The roles — a regional sales manager in the Midwest and a territory sales manager for the Pacific Northwest — required adept individuals capable of navigating intricate industrial buying processes. The firm needed aggressive sales professionals who could not only engage clients but also drive growth through strategic selling.
The Challenge
Matching Expertise with Manufacturing Sector
While industry-specific technical expertise wasn’t essential, the client was searching for candidates who possessed strong sales acumen. The candidate pool needed to exhibit a mastery of client engagement and the ability to proficiently close deals, a combination that could catalyze the company’s growth.
How BluWave Helped
Specialized Recruitment for Aggressive Sellers
Leveraging its close relationship with third-party non-executive recruiters, BluWave connected the PE firm with a specialized resource from the Business Builders’ Network. The recruiters then targeted individuals who could craft compelling sales narratives and nurture client relationships to drive expansion.
The Result
Accelerated Growth Through Strategic Hiring
The recruiter landed professionals who not only possessed the desired aggressive sales skills but also displayed a knack for strategic thinking within the manufacturing industry. By filling these key positions, the manufacturing company could now adeptly engage industrial clients, converting prospects into customers and driving growth.
Mergers and acquisitions are a key strategy for private equity firms. The process of integrating two companies, however, can be complex and difficult in practice.
That’s why a detailed, well-thought plan is key to success.
“Middle-market and lower-middle market businesses don’t have the surplus of people that publicly traded businesses would,” BluWave co-head of research and operations Scott Bellinger says. “Bringing in a BluWave resource will let those resources focus on their day-to-day jobs while outsourcing the integration to an expert who can do it on a much quicker and efficient timeline than trying to do it internally.”
We’re going to walk through the various steps and best practices at a high level.
Merger Planning & Integration Process
Identifying Potential Targets
The first step in any M&A process is to identify potential targets that align with investment strategies and offer growth prospects.
This involves conducting market research, evaluating competitors and considering companies that fit specific criteria. It’s important to consider factors such as the target company’s financial performance, product offerings and market position.
Conducting Due Diligence
Once potential targets have been identified, it’s time to conduct a thorough due diligence process. This is done to assess things like the target’s financial and operational health, legal and regulatory compliance, and management and personnel.
Bellinger says this essentially comes down to a “synergy assessment” of the buyer and the target.
This is critical to thoroughly understanding the organization before it’s acquired. Reviewing financial statements, interviewing key personnel and evaluating systems and processes are integral parts to most diligence exercises.
Negotiating Terms
After due diligence is finished and a company has decided to move forward, it’s time for both sides to negotiate.
The better the communication between the buyer and the acquisition target, the more likely both will be satisfied with the outcome. That being said, they should carefully consider the terms of the deal before signing to ensure it makes sense for their business.
Integrating the Acquired Company
The final step of any M&A process is integrating the acquired company into the portfolio.
Bellinger says this typically takes between 90-120 days and is focused on integrating various integration streams.
This often involves combining operations, systems and processes. The more detailed and clear the integration plan, the better.
Typical key factors include cultural differences, employee morale and operational efficiency.
A cross-functional team of experts from finance, operations, legal and other areas can make for a comprehensive and coordinated approach.
The right plan will outlining the required steps – in detail – to smoothly integrate the acquired company into the PE firm’s portfolio.
To the degree that it’s legally permissible, the firm should keep employees, customers and other stakeholders informed throughout the process. Sometimes no news at all can spook key stakeholders, even if everything’s going according to plan.
It may make sense to hire an interim CFO who’s experienced in these situations and can hit the ground running.
Merger planning and integration is a specialty of the service providers in the exclusive BluWave-vetted network.
“Engaging these firms pre-close can help you understand and validate cost synergies after the acquisition is complete and integrated,” Bellinger says.
Each resource goes through a rigorous evaluation before its admitted into the network, and again before we connect them with you. Instead of spending days or weeks searching for the right resources to plan your merger, we’ll provide the two or three “best fits” within a single business day.
Business intelligence and analytics is a key facet of modern-day business building.
“BI gives you the ability to dig deeper in to all the operations of your business to track KPIs and other metrics, which can then help you steer your business,” says Houston Slatton, BluWave’s head of technology.
Leaders at private equity firms, portfolio companies and private and public companies use data to answer questions about their business. This could give them a better understanding of their customer base or product, for example.
“It’s using very large amounts of, and sometimes real-time data to paint a whole picture of your customers, your business and your products or services,” the founding partner at one of our expert service providers says. “The difference between business intelligence and analytics and maybe traditional financial analysis is the scale at which it happens.”
In the past, business leaders would get information from an old database and manual analyze it in a spreadsheet program. That very spreadsheet fundamentally limits the analysis, according to the data firm’s founding partner, Mike Datus.
“Once you enter the realm of business intelligence or analytics, or data science is sometimes used synonymously, you’re talking about a bigger, more comprehensive, more real-time picture,” Datus says.
One key way to maximize portfolio company performance is with private equity analytics. The right data helps a firm make better investment decisions while maximizing portfolio company performance.
The right information also helps with risk management, and eventually, increasing a portfolio company’s exit value.
Of course, non-PE firms can reap the same benefits to build their business. Slatton says this process starts with putting your data in a data warehouse and formatting it in a way that’s “analytics ready.”
“The next chunk is building or doing analysis on top of that data,” he adds. “Probably a lot of defining KPIs or metrics. All businesses are generally going to agree on revenue, but most of the operational metrics, there’s probably a little wiggle room around. But you can’t build a visualization with wiggle room.”
Precision, then, is key to actionable analytics. Once you have reliable, accurate data in place, it’s time to put it to work.
“You’re going to build some visualizations on top of that analysis so you can build some metrics over time and build some historical results and predict future results as well,” Slatton says.
By monitoring key performance indicators and market trends, organizations can identify weaknesses. The right data can help develop strategies to address these issues and strengthen a firm’s portco or a company’s operations.
“Most companies don’t have great insight into the actual operations of their business at the granular level that you can have now,” Slatton says. “It’s an investment to put in a full data stack and to build the visualization capabilities. But you can really unearth a lot of highly impactful insights about your business once you have access to the granular data sets.”
One of the key considerations in BI & analytics is the selection of data sources. As Slatton mentioned earlier, accuracy is imperative, along with up-to-date information that’s aligned with the firm’s overall strategy.
“One of the most important parts of BI is figuring out what the actual KPIs are that are going to be the real levers of the business and making sure to track those,” Slatton says.
Once the firm knows what it wants to monitor, it must decide how to securely collect and store that information.
Integrating new private equity analytics programs and tools must be done with existing systems in mind. These might include portfolio management software, investor reporting platforms, website analytics, payroll management and more.
Lastly, and most practically, the data must be accessible for the relevant parties. That means reports that are easy to analyze and share. That way, everyone from partners to C-suite executives to the most junior employee in the organization understands what’s driving the decisions that affect them.
Whether you’re the CTO at an independent company, an interim CFO at a portco, or any other business building role, we have expertly vetted analytics and insights resources on standby.
The BluWave-grade network of service providers have helped hundreds of companies like yours choose, implement and distribute data platforms that have a positive impact on their organization’s value.
“You want a group that can define the right, limited set of KPIs,” Slatton says. “The C-suite or leadership team should bring that to the table, but you want a group you’re going to be able to work with to define and refine the KPIs that you use to drive the business.”
Contact us to set up an initial scoping call, and we’ll connect you with two or three best-fit resources for your exact situation within a single business day.
*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.
One expert service provider from our network says his firm has seen an influx of diligence requests in this industry since the beginning of 2022, and it hasn’t slowed down since.
“There continues to be a lot of interest in the healthcare sector, whether it’s device manufacturers or contract manufacturers, and even services,” Don Jenkins* of M&A Healthcare Experts says. “Whether it’s tele-health-related services or just other technology platforms that can address healthcare service delivery.”
With so much money to spend on hand, Jenkins says that middle-market private equity is all over the map.
When he thinks about the last 50 projects they have done for private equity firms, he estimates they would span 20 different markets.
There are a couple, however, that have stood out since as we head deeper into an uncertain, if not turbulent economy. One of those is healthcare.
Firms want to dig deep to learn more about the devices and software systems being used in hospitals. Just as popular, though, are in-home services that allow people to receive diagnosis and treatment from the comfort of their home. This trend has become especially important since the onset of COVID.
Healthcare Due Diligence Process
“Essentially 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 that they can make an informed decision on their investment,” Jenkins says.
While the fundamentals of commercial due diligence are the same from one market to another, there are nuances to businesses based in hospitals, pharmacies and other related medical organizations.
Since these companies are creating or using products that affect people’s health, there’s increased risk, which means more scrutiny is needed.
“It can be a very different set of objectives, but if it’s a product, then there definitely will be regulatory issues involved,” Jenkins says.
Service providers in healthcare aren’t just trying to make better products and improve services, they also want to be more affordable.
“It’s still technology, but we’re not trying to design the greatest device, the greatest stent in the world, or the greatest cardiovascular diagnostic product ever made,” Jenkins says. “It’s really what sort of products and services can we develop that are going to not only get the job done, but do it in a more cost-effective manner so that it’s more affordable for the healthcare ecosystem.”
In particular, that ecosystem includes insurance providers and patients. The easier it is for them to engage with a health company’s products or services, the more successful the business will be.
“There are just a lot of moving parts in healthcare that make it an interesting space,” Jenkins adds.
BluWave co-head of research and operations Scott Bellinger most frequently fields calls related to these areas:
Medical Devices: “Regulatory review on manufacturing processes to make sure they’re FDA compliant.”
Operational Diligence: “Understand how you can manufacture those devices at a faster more efficient clip.”
Ancillary Service Buildouts: “For example, if you’re ear, nose and throat, do they have an ambulatory services center?”
Jenkins isn’t the only one seeing an increased demand for commercial due diligence in healthcare. It continues to be one of the most important industries to our clients as well.
That’s why we spend so much time connecting with and evaluating due diligence service providers who know healthcare – and every other sector that touches private equity – inside-out, backward and forward.
Our research and operations team takes a hands-on, white-glove approach to every project they service, from the first scoping call until after the engagement is complete.
If you’re looking for proven, PE-grade service providers to conduct buy-side diligence on your healthcare acquisition, contact us today. We’ll provide two or three best-fit options for your exact situation and specific needs within a single business day. From there, we’ll hold the third-party resource accountable and make sure they’re meeting all your needs until the ink is dry.
*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.
Service Provider Type: Vice President of Human Resources/People Operations
Industry: Technology – Software
The Need
High-Performing Executive To Lead HR Department
A portfolio company engaged BluWave to orchestrate a targeted search for a vice president of people operations to lead a technology software company’s HR endeavors. The company’s vision to maintain high employee engagement, foster a growth-oriented culture and optimize the recruitment process necessitated a skilled HR leader.
The Challenge
Cultivating Culture and High-Performing Teams
The primary challenge was to find a VP of HR who could uphold the existing culture’s vibrancy while growing it. The candidate needed to blend strategic HR expertise with an ability to manage and integrate a dynamic culture within a growing technology company.
How BluWave Helped
Tailored Search for People-First Leadership
BluWave collaborated with the portfolio company to craft a tailored executive search strategy that aligned with the software company’s values-driven culture. This approach identified a rising star – the “A player” the company sought – capable of not only driving HR strategies but also contributing to organizational health, diversity and inclusion, and talent acquisition.
The Result
Empowering Organizational Transformation
The transformative HR leader resonated with the company’s values and growth mindset. He brought a blend of high-tech experience and a strategic yet hands-on approach. With the new leader in place, the company is poised to enhance its employee engagement, build a robust hiring system and propel its organizational excellence journey.
BluWave’s tailored approach to executive search ensured a seamless integration of an HR leader who shares the company’s vision, values and goals.
A multi-location dental business needed a COO to turn around the organization’s operations. The goal was to enhance efficiency by overseeing regional managers and streamlining various aspects of the dental clinics.
The Challenge
Navigating Complex Operations
The business needed the rare COO capable of managing six regional managers, each overseeing a cluster of dental clinics. Additionally, the C-suite executive needed to address specific requirements such as inventory management, customer relationship management, advertising and P&L responsibilities. Identifying an executive proficient in dental healthcare operations while possessing the aptitude for process optimization added to the complexity.
How BluWave Helped
The Perfect Match on Standby
BluWave presented a short-list of accomplished industry-specific recruiting firms. The dental business selected one, and was connected with a candidate who showcased expertise in multi-location healthcare operations, displaying an adept understanding of streamlining processes, inventory management and customer engagement. His background, including lean transformation knowledge, aligned perfectly with the portfolio company’s requirements.
The Result
Drastic Operations Improvement
With his proficiency in regional management, inventory control and customer relations, the new chief operations officer drastically improved the dental clinics’s day-to-day functions. This engagement demonstrated BluWave’s ability to connect specialized recruiting firms with the unique needs of small-market private equity firms and their portcos, fostering operational excellence in specialized industries.
Service Provider Type: Carveout Consultant Experts
Industry: Industrial Services
The Need
Standing Up Operations
When confronted with a corporate carve-out investment opportunity under LOI, a small-market private equity firm sought BluWave’s assistance in orchestrating a seamless transition for a new entity. This carve-out, centered around an industrial park in the south-central U.S., required focused expertise in accounting, finance and HR functional areas.
The Challenge
Complex Carve-Out Dynamics
The complexity of the carve-out scenario was heightened by the diverse array of services provided by the new entity, which included utilities like steam, rail, nitrogen and compressed air to multiple tenants, primarily large chemical manufacturers. The intricate billing structures, coupled with the transition from the parent company’s systems, created a challenging operational environment that needed efficient streamlining.
How BluWave Helped
Facilitating Operational Transition
BluWave connected the private equity firm with a merger planning and integration service provider specializing in complex carve-outs. This expert team was well-versed in the unique operational demands of the petrochemical industry, with experience in downstream, refining and industrial manufacturing.
The Result
Smooth Operational Setup
Through strategic planning and tailored solutions, the service provider orchestrated a seamless transition for the carve-out entity. A team of skilled professionals were deployed to ensure the setup of accounting, finance and HR functions. This temporary team’s task was to not only establish operational stability but also ensure a smooth handover to a future controller or CFO, enabling sustained operational excellence.
The new entity emerged from the carve-out process with an efficiently functioning operational backbone, poised to continue its growth trajectory in the industrial park landscape.
In the early stages of acquiring a digital mortgage solutions provider a middle-market private equity firm sought an effective chief of staff to drive the integration process and optimize operational efficiency. The acquired company’s expansion strategy and portfolio growth prompted the need for an experienced executive capable of orchestrating seamless transitions.
The Challenge
Unifying Post-Acquisition Dynamics
The chief of staff position needed to address a multifaceted challenge. The acquired digital mortgage solutions provider operated within the intricate domain of technology and software. Additionally, the firm’s existing portfolio contained companies that could benefit from digital strategy expertise. Establishing unity between these diverse components required strategic alignment and cross-functional integration.
How BluWave Helped
Orchestrating Seamless Integration
BluWave connected the firm with an executive search firm that understood the intricacies of the technology industry and the nuances of executive leadership. The visionary leader selected possessed the expertise to bridge the gaps between the acquired mortgage solutions provider, the existing portfolio companies, and the firm’s strategic goals.
The Result
Accelerating Digital Transformation
Through a tailored executive search, the service provider identified a dynamic chief of staff with a profound background in technology and software. This executive’s expertise in project management, cross-functional collaboration and digital transformation uniquely positioned them to orchestrate seamless integration.
The PE firm’s portco overcame the complexities of merging diverse entities within the technology and software industry, ultimately accelerating their journey toward digital transformation and operational excellence.
Connecting with a service provider you can trust is like looking for a great dentist. Once you find “the one,” you wouldn’t put your teeth in anyone else’s hands.
The same goes for your business. After a successful engagement with a trusted third party, you save a lot of time by contacting them directly the next time you have a need.
There are reasons you have go-to service providers: they’re fast, reliable and they know your business.
But if you love them so much, you’re probably not their only client. Far from it.
So what happens when you reach out and they tell you they simply don’t have the capacity to take on more work on the timeline you need? Or worse yet, they give you their B-team.
There are a number of reasons service providers could suddenly be in high demand. A bounce-back from a recession. A surge in deal flow. A hot new trend of which everyone’s trying to stay ahead.
When this happens, BluWave is on standby with a deep bench of trusted, PE-grade third parties who can deliver the exceptional work you expect no matter what your industry.
In fact, we experienced this post-COVID recovery when the whole world got back to business at once and it seemed like there wasn’t enough help to go around. At that time, we heard from dozens of private equity firms that couldn’t book their preferred third-party resource.
We helped those firms by connecting them with industry-specific firms and consultants that understood their business’s most pressing needs.
Every service provider in the Business Builders’ Network has gone through a rigorous vetting process, giving us confidence in every match we make whether it’s a first-time engagement or a repeat relationship.
BluWave founder and CEO Sean Mooney has three tips for organizations when their usual service providers are at full capacity.
1) Use Alternatives
“If you’re go-to is sold out, don’t try to force them into giving you capacity. You’ll get the C team,” Mooney says. “There are plenty of other comparable PE-grade specialists that you should use.”
2) Use Substitutes
“There are other diligence and value creation products that go by a different name but still serve your need,” he adds. “For instance, if you can’t get a commercial due diligence group to meet your deadline, use a voice of the customer group to do a deep dive on your target’s customers.”
3) Use Independent Consultants
“There’s a select world of independents who spun out of name-brand shops and can give you the same product at a fraction of the cost,” Mooney says. “This cohort works well not only for commercial diligence, but also for operational and HR diligence as well as value creation.”
Mooney recognizes that trusting your most important work to new partners can be scary. With the right introduction, though, the risk can have a huge payoff.
“Using new groups can be nerve-racking,” he says, “but the BluWave network of PE-grade resources is on standby to meet your specific needs.”
Whether your go-to service providers are at full capacity, or you just don’t know who to turn to, give our research and operations team a call. They’ll connect you with a shortlist of exact-fit third parties within a single business day, and be by your side until the completion of the project.
An upper-middle market PE firm wanted to conduct a comprehensive market study on an acquisition target: a company that provides part-time finance resources and accounting services to non-profits.
The Challenge
Navigating Multifaceted Industry
The challenge lay in dissecting the multifaceted industry landscape, combining accounting, consulting and staffing. The market study would need to reveal client behaviors, buyer dynamics, TAM and competitive landscape.
How BluWave Helped
Strategic Connection for Deep Market Insights
BluWave identified a market study firm with:
Non-profit Expertise: Specializing in financial services, offering insights into accounting, consulting and staffing dynamics.
Comprehensive Analysis: Explored client behavior, buyer landscape, competitive positioning and growth potential in nonprofit financial services.
Future-Forward Focus: Investigated data analytics and cloud synergy with nonprofits, enhancing AI/ML capabilities and implementation strategies.
The Result
Study that Surpasses Expectations
The market study revealed all the PE firm had hoped for and more:
Holistic Understanding: Unveiled nonprofit finance nuances, including part-time resources and consulting, providing a comprehensive sector view.
Strategic Opportunities: Analyzed client behaviors and growth prospects, empowering the PE firm with expansion strategies.
Future Resilience: Explored data analytics and cloud services’ role in nonprofit finance, boosting sector resilience and innovation.
