Every quarter we gather leading women in PE to discuss current industry topics and to offer intelligent women the chance to gather, share information, and decompress with one another. In our most recent event, we gathered to discuss the trending topics of how inflation is impacting the investment life cycle, ESG, and what the future of work looks like in PE. We have shared the themes we heard discussed across different areas below.
These forums are invite-only and follow Chatham House Rules, so listed below are high-level takeaways only. Are you a woman in private equity and interested in joining fellow leading PE professionals during our next Women in PE Forum? Register for our upcoming Women in PE Forum here.
Inflation: Inflation is impacting every point in the investment lifecycle from capital deployment to portfolio company bottom lines.
Deal Flow: From a deal flow perspective, higher interest rates will rebalance how investors think of risk/reward, but there is still $2 trillion of dry powder waiting to be deployed. Valuations are beginning to come down on the public market side, but it may be months (or years) before valuations come down on the private side. In an era of inflation, generating top-tier returns will take old-school value creation to improve a company’s ability to generate profit.
Portco: From a portfolio company perspective, inflation is impacting labor, commodity prices, and transportation costs. To reduce labor inflationary pressure, double down on culture, embrace tiered comp structures, and lean into automation. To fight back against commodity price increases, consider multi-sourcing, supplier negotiation, and increase prices where necessary. To address transportation/supply chain issues, consider on-shoring or near-shoring to start to balance sourcing.
ESG: Expectations on ESG are continuing to evolve, shifting from a “nice to have” to a “must have.” ESG has climbed into BluWave’s top 10 use cases on both diligence and value creation in the BluWave Activity Index. LPs are now expecting firms to collect ESG data, report on it, and make meaningful progress over time. Firms are baking ESG into value creation planning and creating thorough checklists that apply to the full portfolio.
Future of Work: COVID has disrupted all dimensions of work, from the work itself, to the worker, to the workplace. Employees are now expecting remote/hybrid work. The role of the office will continue to evolve and move towards a hub for creativity, social interactions, and building culture. The work itself is also changing – more portcos are leaning into technology and automation.
We thoroughly enjoyed getting to gather with other leading women in PE to discuss these trending topics. If we can be of help with any of the above, we’d be happy to quickly connect you to the exact-fit, PE-grade, third-party resources you need.
Interested in learning more about BluWave? Check out our Introduction to BluWave video to learn more about us and how we can help you. If you have an immediate need, contact us here or use the start a project button above – we’ll be happy to help you right away.
As part of an ongoing series, we’re sharing real-time trending topics we are hearing from our 500+ PE firm clients. In our most recent installment, we discuss why leading PE firms are choosing to engage specialized executive search firms over larger generalist recruiting firms.
Learn more by watching the video below.
Interested in connecting with a specialized recruiter or any other type of third party? Contact us here. You can also learn more about the specific ways we drive value for PE firms by connecting them to the exact-fit resources they need by reading our case studies.
An interim CHRO was needed during a multi-business merger
A principal at a middle market PE firm came to us with a vital need for an interim CHRO for their new global consulting platform that was a merger of 3 companies. The platform was closing in 3 to 5 days, our client needed the interim CHRO as soon as possible. They needed an individual to lead the merging of the new platform’s three HR departments into one. The key swimlanes included:
Advising on future state systems
Developing an end-to-end solution for a comprehensive compensation and benefits plan for 100+ employees
Organizing their Human Resources Information System selection process
Migrating off their professional employer organizations
We quickly collected the specific requirements for the interim chief revenue officer from our client
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade interim chief human resources officer needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of experienced HR leaders that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria. After that, we connected the client with the select pre-vetted interim CHRO candidates from our invitation-only Business Builders’ Network that fit their exact needs.
Interim CHRO hired to lead the talent portion of the merger
Twenty-four hours after our initial scoping call, we introduced the PE firm and portfolio company to two PE-grade HR executive candidates. Both of the candidates had relevant functional, geographical, and middle market PE firm experience. After meeting with each of the candidates, our client selected their ideal choice. The interim executive was onboarded within the needed timeframe and successfully managed all HR aspects of the merger.
We recently spoke with Mark DeBlois and Rufus Clark, two of the Co-Founders and Managing Partners of Bunker Hill Capital, a private equity firm investing in entrepreneur and founder-owned lower middle market companies in North America. Bunker Hill has offices in Boston, MA and San Diego, CA.
The four partners at Bunker Hill have worked together for over 20 years as private equity investors with lower middle market companies. As lead investors, they actively work with portfolio companies leveraging their extensive board-level and strategic planning experience.
When I caught up with them on the journey of Bunker Hill Capital, it was refreshing to hear how, in a world consumed with change, nothing can quite replace years of dedicated experience, a focus on relationships, and a time-tested investment ethos.
Tell us about the founding of Bunker Hill Capital.
We were senior members of the buyout team at BancBoston Capital, one of the largest bank-affiliated investment companies in the US, and it became increasingly apparent that going it alone would allow us to control our own destiny. Having a private equity mindset is different from how a commercial bank approaches investing, and we wanted to manage the business without these inherent limitations. Also, being able to change our investment strategy and how we invested was just as important.
An example is our ability to work closely with a variety of value-added partners including operating professionals and strategy consultants. Our relationships with them are a cornerstone of how we invest, proactively create value, and build relationships across the marketplace. As part of establishing Bunker Hill Capital, we were able to develop relationships with a wide range of strategic partners that was not possible when part of a large institution.
So, we spun out to start our own firm, Bunker Hill Capital, just under two decades ago.
Since then, how has the market changed?
The transaction dynamics have changed with the growth in the alternative asset class. The amount of capital flowing into the asset class has increased dramatically as has the number of PE funds, pushing up multiples over time.
Our core market, the lower middle market, includes companies with revenues between $5 million and $100 million—of which there are approximately 360,000 in the United States today. Compare that to the next level up, where there are about 22,000 companies with revenue between $100 million and $500 million, so our opportunity pool is 16 times larger.
In our market, we can source deals either as one-off deals directly from owner-entrepreneurs as sellers, through intermediaries such as accountants and attorneys, or through limited auctions, where an investment bank brings together people they know who can close deals and who have years of experience in the lower middle market, such as ourselves.
So, it’s actually the market dynamics in this end of the lower middle market that have not changed as dramatically that allow us to continue to reap the benefits.
An area where we have seen change is increasing prices in each market segment. However, as much as they have all gone up, the relative delta between the lower and upper middle markets has remained constant. For example, hypothetically as the first PE owner we may pay between 6.5x and 7x on EBITDA for the companies we invest in (compared to 2003, which was 5-6x). We then sell these companies to strategic buyers or the next market level up—large PE funds that pay between 8x to 10x on EBITDA multiples. So when we sell our companies to these strategic buyers, we capitalize on this multiple arbitrage.
What differentiates Bunker Hill Capital?
Bunker Hill Capital is well-known in the lower middle market, having been in this market segment for over 20 years, which is very unusual.
We are unique in that we have the luxury of staying in the smaller end of the market. People tend to think bigger is better. We think we can have more impact strategically on these smaller companies over a shorter period of time, compared with the larger deals that are more like steamships: huge and take a lot longer to turn.
Our key criteria for buying companies is to be the first PE owner buying from founders and owner-entrepreneurs who either want to remain in the business or have identified their management team. This is 70 to 80 percent of our deals.
This is important because these founders are looking to crystalize the value of their sweat equity, and take some of their chips off the table for a variety of reasons. Finding a partner who will risk their own money to do this and take the company to the next level is key. The founder can then continue to enjoy the benefit of their minority capital stake, thereby continuing to increase their wealth by getting a “second bite of the apple.”
We do extensive strategy and infrastructure work at the companies we buy to allow them to scale. The larger funds, in the next level up, buy from folks like us as they can’t grow just organically; they need to grow through acquisition to get the kind of returns and exit multiples to satisfy their investors. Therefore, by definition, they must combine organic growth with acquisitions. And that’s where we come in.
How is Bunker Hill approaching the investment process to generate differentiated returns?
Early on from Fund I we refined our due diligence process, such as building relationships with our network of strategic partners. A lot of these refinements we did during Fund I, so the due diligence process we have now follows the same repeatable model. This has resulted in a time-tested methodology.
We believe the 20+ year evolution of our methodical investment process is world-class. Being a fiduciary to our limited partners, we are very hands-on in the businesses we invest in. We collaborate closely with our management teams and give them the tools they’ve never had before to better serve the business.
Post-close, we go through a 90- to 120-day strategic planning process to implement the findings from our detailed pre-sale due diligence and formalize the strategy into what we call a “Full Potential Roadmap.” This is coupled with a “Key Initiative Tracker,” which breaks down the Roadmap into an implementable plan, and is then tracked and monitored weekly and/or monthly with clear accountability and performance-based outcomes.
Finally, this plan is driven by the growth initiatives we are going after and how we want to scale the business’ revenue. But perhaps more rewarding is that after going through the process, most of the CEOs thank us for these invaluable tools that help them empower their own people, hold them accountable, and transform their business.
How is working with a Founder-Owned business unique?
Owner-entrepreneurs and founders can run the spectrum on experience and/or business sophistication, so identifying where along this spectrum the founder is and recognizing this is part of our due diligence process.
We place enormous emphasis on these founder relationships and if the chemistry is not quite right, we may decide not to proceed for the benefit of all parties. This is where the buck stops, especially if the owner is critical to the business.
Working with a wide variety of owners and CEOs is like working with any new person. We don’t delegate this relationship down to junior staff, as it is very personal at the managing partner level. You have to quickly figure out their strengths, growth opportunities, skills, and communication style, and we have to work with all of this while going through complex transactions – working through strategy, implementation, and everything else that goes along with the transaction.
Sometimes the owner is the CEO, and sometimes that’s not the case. The strongest CEOs are proactive and are on top of the Key Initiative Tracker. Some of the best CEOs we have worked with are self-aware enough to know where their highest value is in their role with the new company, including using the Key Initiative Tracker to mentor and track their direct reports, and then leading the charge on implementing these growth initiatives throughout the organization.
Can you talk about the role of ESG in Private Equity?:
ESG is a hot topic now. Most PE firms were doing a portion of this before it really got labeled. We were always doing environmental and social due diligence with potential investments.
Historically, we have intentionally looked at where the company could be more environmentally friendly and socially aware. Examples include increasing the recycling of waste materials, cutting down on energy consumption, and recruiting the most qualified candidates for roles.
Within our Key Initiative Tracker, we formalized this by putting in a group of ESG initiatives and being more explicit about it with our companies.
For example, we are being more proactive when we are sourcing overseas with a supplier code of conduct that includes detailed standards that our suppliers have to abide by.
On the social side, we have a strong bench of DEI candidates throughout our companies. DEI is built into our recruiting approach when hiring the most qualified person for the job.
For someone entering Private Equity in today’s landscape, what advice would you offer to them?
Find partners you can trust and work with. There are lots of ups and downs. You work hard and go through a lot— it can be very rewarding, but you need to have trusted partners over a long period of time.
You don’t know what you don’t know, and like everything else there is an evolution. There is no replacement for experience. It is complex enough doing what we do, and over the past couple of decades we have been able to cultivate relationships and refine our process along with the types of companies we invest in.
Also, don’t be afraid to surround yourself with smart people, not only inside the GP but also with your outside advisors. The relationships we have with our world-class executive network have been mutually beneficial. For example, our CEOs that are still assisting in our deals 20 years later is only something you can build over time. You can’t flip a switch and say, “I want that Day One.” It comes with being in the trenches together over a long period of time.
Interested in hearing what other PE experts have said in our interview series? Check them out here.
Every quarter we bring together top PE HR and talent executives to discuss current industry topics and to offer talent leaders in private equity the chance to gather, share intel, and decompress with one another. In our most recent event, we discussed many topics and listed our top takeaways below.
These forums follow Chatham House Rules, so listed below are high-level takeaways only. Are you in private equity and interested in joining fellow leading PE professionals during our next Human Capital Forum? RSVP for our next event on August 24th.
Resource scarcity:
All firms are facing the impact of this in some way. Here are a few ideas for addressing this challenge:
Lean into interim execs to professionalize certain business areas immediately post-acquisition, steady the ship while a more permanent search takes longer than it has historically, and/or serve as a “try before you buy” resource.
Get clarity on the “must-have” vs “nice to have” qualification of candidates from the hiring teams (portco execs or deal team). Everyone wants LeBron, but would you settle for Kevin or Steph? Evaluate possibilities to reassign work elsewhere in the business or settle with a 9/10 fit candidate.
Line up third-party resources as early as possible to ensure they aren’t booked.
Streamline the recruiting process, especially when you know the candidate may receive multiple offers.
Developing current talent:
Given how hard it is to get top talent in place, many firms and companies are trying to solve for it by developing more junior talent to step into exec roles.
Human capital teams are creating development and training plans that are broadly applicable to all portcos and can be tailored based on the company, position, and makeup/structure of the exec team.
Each business is unique, but there are common experiences in talent development that can cut across groups. Listen to employees to determine what type of development they want (coaching, training, continuing education, etc.).
Managing relationships with specialized recruiters:
In BluWave’s recently published Q1 Insights report, specialized recruiters were a top use case on the BluWave Value Creation Index, emphasizing the importance of partnering with recruiters who already know the top players with the right skills for their specific needs.
Sometimes it may be helpful to consider a recruiter directly adjacent to the industry/functional area you are seeking, as they may approach the search differently.
Additionally, when presenting search firm options, it is helpful to share multiple options with the hiring manager, so they can find the best fit for them.
We thoroughly enjoyed the fruitful conversations that occurred during this recent gathering of PE human capital professionals. If we can be of assistance during this busy time, please let us know.
Additionally, you may be interested in checking out some of our human capital specific resources, which can be found here:
ACG InterGrowth 2022, known as the premier dealmaking conference, was conceptualized to build and strengthen relationships between private equity firms and investment banks. This annual conference allows PE industry leaders to gather and discuss key trends. Last week was filled with cybersecurity, DE&I, and supply chain thought leadership conversations, plus some Las Vegas style poolside networking.
As hundreds of private equity professionals and investment bankers filled the ARIA Resort & Casino from April 25-27, 2022, our team was able to re-connect with familiar faces as well as meet new ones.
“You could feel the eagerness to be back in person the moment you arrived. From founders to deal teams to business development professionals, the atmosphere was engulfed by ideation and excitement,” says Michael Mahan, BluWave Account Management Director.
Here are some of our team’s top takeaways from our largest conference back in person:
Quality Deal Flow Challenges
PE firms broadly shared that activity is slower compared to last year at this time. Our data confirms this as due diligence projects have declined YoY, from 28% of the BluWave Activity Index in Q1 2021 to now 22% in Q1 2022. While overall deal flows are beginning to increase, deal teams expressed that quality deals are hard to come by.
Lights, Deals, Action!
While ‘digital transformation’ remains a top buzzword, we know that top-performing, proactive PE firms and their portfolio companies are looking to transform their businesses, not just optimize them. Industries such as manufacturing and supply chain are dependent on new technologies to scale growth and meet the industry demand post-pandemic.
Market Differentiation
Building brand equity to differentiate your firm is important in today’s crowded landscape. With less quality deals in the market, it is mission critical for firms to remain top of mind with investment bankers. PE firms are finding creative ways to do this through utilizing specialized resources that can help them with their internal branding, & more.
ACG InterGrowth 2022 exceeded our expectations, and it was great to have the opportunity to connect with so many individuals in person. If you were unable to attend the conference, but are interested in connecting with us, contact us here.
BluWave Account Manager Morgan Murphy concludes, “This year’s conference was instrumental in continuing to build our relationships with PE firms face-to-face. Until next year!”
BluWave works with over 500 PE firms from around the globe as well as their portfolio companies and proactive independent companies, connecting them with pre-vetted, best-in-class, third-party service providers across a variety of resource and functional areas. From information technology and manufacturing to healthcare, consumer goods, and beyond, our clients are expert business builders. In other words, they have their heads in the game and their hands on the pulse of news and insights you can use.
Check out the latest, curated collection of our clients’ musings on everything from retail industry news to ESG and CEO perspectives.
Blackstone recently gathered CEOs across their portfolio companies for their annual CEO Conference. While we live in a world where it’s rare for anyone, nonetheless decision-makers, to agree on political or major topics as well as growth and business strategies, here are some key insights that brought the group together. Highlights include recruiting and retaining talent, finding success in simplicity, and keeping ESG at the top of their agendas.
Vice President at Baird Capital, Becca Schlagenhauf, dives into root causes of grid instability and how the growth in demand can lead to growth in distributed energy resources. The movement towards green energy still comes with its own sets of challenges associated with cost and reliability. As new technologies are being brought online, this has created solutions that are going to be vital to the global electricity infrastructure moving forward.
Learn about Heartwood Partners’ continual increased interest in different recycling and environmental services businesses and about their notion to “do well by doing good.” Their ultimate interests lie in the recyclability of finished products after they have been used by end-customers. Opportunistic themes and strategies involve packaging, agriculture, consumers, and more.
MiddleGround Capital Founding Partner, John Stewart, spills his secrets on how their operational focus enabled their companies to build resilience prior to and during the pandemic. Due to the pent-up demand from 2020 in manufacturing and industrials, Stewart highlights the opportunities for American workers as manufacturing wages are spiking. With the industry being under-invested as a whole for the past few decades, the opportunities for business to take advantage in technologies to produce more products is unmatched.
Michael Fieldstone is a Co-Founder and Partner at Aterian and has worked in private equity investing for more than twenty years. Prior to founding Aterian in 2009, he was a principal at both Sun Capital Partners and Apollo Management, and part of the Mergers & Acquisitions Investment banking group at Salomon Smith Barney. With regard to taking the entrepreneurial plunge with Aterian, he says: “We set out to build a firm that appreciates all the stakeholders of a company. To be collaborative in working with management teams. To create a transparent atmosphere in which we are dedicated to solving problems. Success to us is taking companies to new heights, and in doing so, creating value for employees, customers, vendors, the environment, underlying communities, and our investors.”
While his sentiments seem lofty, Fieldstone and his Co-Founders, Brandon Bethea and Christopher Thomas have seen numerous successes over the last decade-plus, and have ridden the waves of economic uncertainty with grit and fortitude. The result: growing already great family-founder companies in ways they didn’t think possible.
During our inaugural BluWave 2022 Top PE Innovator Awards, we recognized Aterian specifically for their innovative practices across proactive due diligence, transformative value creation, progressive PE firm operations, and ESG. Michael recently sat down with me to share some of his experiences and strategies for both creating value and supporting middle market companies during rapid growth.
Sean Mooney: How do you make sense of growth versus value investing in today’s marketplace?
Michael Fieldstone: This is a perplexing question for many investors. The multiples in private equity have changed so much over the past two decades. For example, at the turn of the 21st century, the average multiple was 7x; today, it is an average of 12x. This appreciation applies to both large LBOs as well as those in the middle market which we participate in. Additionally, the range of multiples can be extreme – as one can buy into an out of favor or cyclical industry such as oil and gas for less than 5x or invest in a high growth software or social media company for 20x+. The last time growth investing was so robust was in the late 1990s, and this phenomenon was driven by venture capital firms and tech companies themselves. Moreover, large non-tech companies had to follow suit and develop or acquire an internet or digital strategy to keep up. Many large companies such as GE, as we know, had a difficult time adopting startup practices organically. Other large companies such as Polaroid or Kodak became walking dinosaurs.
This time around, PE firms are also participating in high-growth – almost venture-like investing –as both an offensive and a defensive strategy. With technological disruption impacting most sectors (i.e. e-commerce, fintech, alternative energy, streaming/media distribution, cybersecurity, Medtech – and the list goes on), and with cheap and abundant capital, why not invest large amounts alongside mega trends even if at higher valuations? The alternative is to invest against mega trends – for example, into a large, non-omnichannel retail chain – which is like building a plane while it’s flying.
SM: On what side of that investor equation do you see Aterian?
MF: It may sound diplomatic, but our approach to market is a combination of value and growth investing. We typically invest in companies that are “mature” – certainly they already have sales and have typically been in existence for many decades. Then we look to accelerate their growth through investments both organically and through add-ons. We enhance their existing infrastructure and customer relationships in ways the management teams desire but may not have had the capital or organizational expertise to do so under previous ownership. We look to drive innovation, including through new products or services, with greater conveniences or capabilities to become more vital to customers. A great example is Aterian’s backing of a company called The Pace Companies, a leading commercial plumbing contractor in NYC. Three years ago, we partnered with its founder, Andru Coren, to help him achieve his vision of being the leader in all the subcontractor trade groups in NYC and surrounding areas, including HVAC, mechanical, electrical, and fire protection. While driving this strategy, we also identified the greater regulatory need to assist developers and building owners on reducing their carbon footprint through energy-efficient buildings. Flash forward to today, through the formation of holding company Eaglestone with shared services, we have executed on Andru’s vision by acquiring over a half dozen companies and becoming a leading infrastructure company in NYC and surrounding areas where we provide a full suite of services including plumbing, HVAC, fire protection, solar, and EV charging stations, all in the context of improved energy efficiency building standards.
SM: What are the key areas Aterian focuses on in its valuation creation plan, and what in that plan is the hardest to achieve?
MF: There are no corners to cut – at the root of any plan is extensive third-party customer and industry research to figure out where the company fits into its marketplace, its strengths and weaknesses, and how to improve its competitive advantages in partnership with management. Oftentimes, our due diligence prior to acquiring a company confirms management’s strategic plan and it is all about getting there faster with the appropriate resources, whether hard dollars or human capital. Additionally, often uncovered in our due diligence phase, we learn about untapped market opportunities, and after confirming their strategic viability, we develop a plan to penetrate such markets organically or through acquisitions.
Organizational development – retaining and recruiting top talent is typically the biggest challenge to achieving any plan. The breadth of the team required to grow a company, all while keeping an eye on existing strategy execution is most critical as well as our greatest challenge. Sometimes we bring in independent board members (who have been in similar positions) as another set of eyes to assure the organization is ready to embark on growth and transformation.
SM: How do you ensure seamless acquisitions/investments so that founders feel supported? What are some of the strategies/tactics you use?
MF: It took years for us to learn this, but the most important thing with founders is to listen to what they are looking for, both professionally and personally. Additionally, it is important to align expectations upfront. Some founders want to continue to run and grow their companies, while others want help on an immediate succession plan. We have successfully worked with founders in both situations.
Another critical component of ensuring a seamless process is open and robust communication. PE-owned companies are much different than family-founder businesses. Most founders have heard horror stories about partnering with a private equity fund, along the lines of PE saying, “it’s our way or the highway.” They are afraid they won’t have any influence over the company culture and direction, and this poses a big risk for founders who want to stay in the business. Our goal is always to keep the culture intact as much as possible during the transition, and we do our best to communicate to founders that we want to invest in their teams as well as their valuation plan. These founders want transparency and candor, they don’t want “razzle dazzle.”
We also offer founders the opportunity to speak with other family- or founder-owned companies we’ve partnered with. This open book approach helps ease some of their fears, when they can hear directly from references who have found success working with Aterian already.
SM: What does Aterian specifically do to win founder- or family-owned business trust “early and often”?
MF: The most important thing we can do to build trust is to say what we do and do what we say. We also need to discuss business goals and objectives in a small group at least a couple times a year. Actions speak heavily as well – supporting companies analytically or by providing other resources they may not have both help build the bridge that we are actually on the same team.
SM: What are Aterian’s internal company values, and how do those get operationalized (or actualized) across your investment portfolio?
MF: We have three core values, and from these fall every action with regard to both our internal and external operations. The first is transparency. With our management teams, our lenders, our investors, everyone. It is our belief that while good news should travel fast, bad news even faster. Without transparency building trust is nearly impossible; and, without trust, you can’t properly evaluate or make decisions.
The next core value is the concept of being collaborative, and hands-on. We expect this from our management teams, and we certainly aren’t sitting back as passive board members. Having said that, it’s important to strike a balance – when to tackle something head on and when to let go.
Lastly, we value long-term thinking. We typically hold onto companies for four to six years but make decisions as though we will own them forever. Warren Buffett has this great quip about the types of companies he wants to buy; he says they should be equivalent to a great piece of art that you would be proud to hang in a museum. In a sense, that’s how we see it. We are willing to put in the time, energy, and resources to make a company art museum worthy.
Interested in hearing what other PE experts have said in our interview series? Check them out here.
Portfolio-wide need for digital marketing consultant
A PE VP of Operations came to us with a critical need for a digital marketing consultant for their entire portfolio. Each company within the firm’s portfolio was experiencing similar problems around communicating digital marketing spend. They saw this as an opportunity to bring in a team that could conduct a portfolio-wide digital marketing assessment and consult the portcos on their current processes, if they were good or bad, where to spend their budget, & more. Given the importance of digital marketing in today’s world, they were looking for an team that was available to start that same month.
BluWave assessed need and presented exact-fit digital marketing consultant
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade digital marketing needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of digital marketing consultancies that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria and then connected the client with the select pre-vetted digital marketing consulting team from our invitation-only Intelligent Network that fit their exact needs.
PE firm confidently engaged provider to assess all companies in the portfolio
Quickly after the initial scoping call, the PE firm and portfolio company were introduced to a select few digital marketing consultancies that specialized in working with PE-backed companies to get their digital marketing up to snuff. The client selected their ideal choice. The PE firm was able to assess the digital marketing capabilities across the portfolio and provide them with the resources they needed to roadmap a plan for improvement.
As part of an ongoing series, we’re sharing real-time trending topics we are hearing from our 500+ PE firm clients. In our most recent installment, one of our Managing Consultants, Scott Bellinger, talks about how leading PE firms are utilizing third parties to manage procurement issues that have been brought on due to inflation and supply chain issues roaring out of control.
Learn more about the unique ways in which PE firms are utilizing third-party procurement groups by watching the video below.
Interested in connecting with a third-party procurement group or any other type of third party? Contact us here. You can also learn more about the specific ways we drive value for PE firms by connecting them to the exact-fit resources they need by reading our case studies.
Every quarter we gather Operating Executives in PE to discuss current industry topics and to offer peers the chance to gather, share information, and decompress with one another. In our most recent event, we gathered to discuss optimal operating team structure, how firms are tackling ESG, as well as GTM and growth strategies.
These forums are for PE Operating Executives only and follow Chatham House Rules, so listed below are high-level takeaways only. Are you in private equity and interested in joining fellow Operating Executives during our next Operating Partners’ Forum? RSVP for the August 23rd forum.
Optimal Ops Team Structure: Every ops team continues to look slightly different—varying between hiring full-time functional/industry experts and/or “athletes”/generalists. Generalists can be dropped into any portco situation, analyze it, and pull in the right third parties when needed. On the other hand, specialists can insource the work by adding niche expertise and credibility. When making the decision between a generalist and a specialist, consider the ramp-up cycle and strategic value. If the project has a high strategic value, many firms choose to use specialists and keep the work in-house. General rule: Have enough capability (in-house or outsourced) to own and execute the value creation plan.
ESG: Even without a mandate, ESG is coming up in more and more conversations and firms are leaning into creating a plan. These plans can look like a lot of different things, but a simple first step is to gauge where you are on various ESG factors at that given moment, and then start to measure (and report) progress. Pick your shots, and don’t feel compelled to tackle every aspect under the ESG umbrella. On the DEI front, some firms have developed a baseline to measure progress on diversity in recruiting, board composition, internal fund composition, and recruiter candidate presentation. Some firms, such as Sumeru, have developed a GP-level DEI strategy by recruiting candidates from underrepresented backgrounds and creating mentorship/fellowship programs.
GTM/Growth Strategy: Go to market strategy is one of the biggest value creation levers a PE firm can pull. In the “new now,” industries and supply chains are meaningfully changing their pricing structures. For many, pricing has become a top initiative at every portco in the portfolio. The top tips in this category were: 1) decrease portcos’ reliance on a single supply contributor in case that person leaves; 2) over-assign sales quotas, knowing you will likely have more attrition than historically; 3) lean more into digital channels to stay relevant.
We thoroughly enjoyed getting to gather with PE Operating Executives to discuss these current hot topics. If we can be of help sourcing needed specialists, developing your ESG strategy, or connecting you with pricing expertise, please contact us.
Interested in learning more about BluWave? Check out our Introduction to BluWave video to learn more about us and how we can help you.
Every quarter our team analyzes the projects we work on with our 500+ PE firm clients to get a birdseye view of the market. You can request your copy here to view all of the trends that we have seen over the past quarter.
Key findings from Q1 included value creation at a historical high, deal flow reflecting 2019 versus 2021, & inflationary pressures impacting how firms thought about everything from pricing to talent.
Learn more about the insights we gleaned from the report by watching the video below.
BluWave has a unique vantage in the private equity industry, working with more than 500 of the world’s top private equity firms across thousands of projects in due diligence, value creation, and preparing for sale. From this activity, we’re able to discern unique insights regarding how and why the world works. The top insight of the first quarter of 2022 relates to value creation. A staggering all-time high record 78% of initiatives tracked in the BluWave Activity Index related to value creation. Here are a few other trends that you might find helpful. Human capital is becoming increasingly important in private equity. With the fallout from The Great Resignation still alive and well, firms are struggling to fill key roles, which has resulted in an increase in time and resources invested in human capital. Across the BluWave Activity Index, 42% is related to human capital, which is up from 36% in the previous quarter. Firms have been utilizing specialized HR resources to recruit A-level talent, retain key players, and bring in critical interim skill sets. One of the biggest trends we’re seeing in private equity and the broader global economy is inflation. We’re seeing PE take proactive measures using specialized third-parties to help them pass through rising input costs, defend against price increases, and hone the operational efficiency of their portfolio companies. For more unique private equity insights, request the BluWave Q1 Insights Report today by following the link below or by contacting us at info@BluWave.net.
