BluWave works with over 500 PE funds from around the globe, connecting them with pre-vetted, best-in-class, interim executives and specialist groups across a variety of resource and functional areas. From information technology and manufacturing to healthcare and consumer goods, our clients are expert business builders. In other words, they have their heads in the game and their hands on the pulse of news you can use.
Check out the latest, curated collection of reports, insights, and musings from a handful of our PE funds.
Recently on their blog, Heartwood Partners shared four key priorities from their integration playbook that allow them to ensure strategic add-on acquisitions within their portfolio result in a, “..whole greater than the sum of its parts”. By handling integrations through a tailored approach focused on strategic alignment, communication, collaborative planning, and integration competency, Heartwood claims that strategic and financial rewards of growth can be realized.
As a guest on 51 Labs’ podcast, Investors & Operators, MiddleGround Capital’s Lauren Mulholland shared how transparency, team building, and improvements to their training process have been instrumental to MiddleGround’s success. She also spoke on a key initiative she has spearheaded at the firm aimed at engaging women of the firm through topics like mental health and building confidence.
Bill Frist, Special Partner at Cressey & Company recently authored a multi-part series that explores the critical role that quality measurement will play in dentistry and oral health in the near future. In this three-part series, Frist examines why dental quality measurement has historically lagged behind other health sectors and how one company is establishing itself as a leader in the dental quality field.
In a recent Buyouts article, Bryan Taylor, Managing Partner at Advent International, spoke to the growing strength of technology in today’s world and how it permeates everything we do. Taylor remarked that private equity investments in tech will only continue to grow, bringing in new capital, new players, and brisker fundraising.
An investment principal at a PE fund came to us with a critical need for Voice of Customer research on a target they had an LOI on in the staffing and recruiting industry. Expecting to get full exclusivity on the target in the next two weeks, they were urgently seeking someone who would quickly be able to perform primary and secondary research on the staffing industry in order to gauge its scope, size, and key players. They were specifically looking for a firm that could go to staffing firms and potential new clients to gather the research, and then synthesize it into usable insights. We quickly worked to understand the key criteria of their need and then leveraged our data and human ingenuity to match them with two select pre-vetted VoC providers. The client selected their ideal choice and were able to gain the customer insights they needed without wasting time or cost.
Senior advisor vitally needed for healthcare services portco
A PE firm came to us with a critical need for a senior advisor for their healthcare services pharmacy company. Having recently acquired the company and already struggling with direct specialty contracts, they urgently needed someone to help on the payor side. They were looking for a local resource with expertise in pharmacy contracting that could guide them through the necessary certification and contracting process within 2 to 4 weeks.
BluWave identifies top senior advisor matching specific criteria
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade senior advisor needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of senior advisors that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria, and then connected the client with select pre-vetted healthcare services senior advisors from our invitation-only Intelligent Network that had the deep pharmacy and payor expertise they needed.
Engaging the ideal provider, the portco gained the help they needed
Quickly after the initial scoping call, the PE firm and portfolio company were introduced to two PE-grade senior advisors that specialized in healthcare services. The client selected their ideal choice. The PE firm was able to confidently drive an excellent outcome without wasting time or cost and the portfolio company was able to quickly gain the help they needed in order to get their specialty contracts in place.
An investment principal at a PE firm came to us with a critical need for Voice of Customer research on a target they had an LOI on in the staffing and recruiting industry. Expecting to get full exclusivity on the target in the next two weeks, they were urgently seeking someone who would quickly be able to perform primary and secondary research on the staffing industry in order to gauge its scope, size, and key players. They were specifically looking for a firm that could go to staffing firms and potential new clients to gather the research, and then synthesize it into usable insights.
BluWave identifies select providers to fit exact needs
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade Voice of Customer needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of VoC providers that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria and then connected the client with two select pre-vetted VoC providers from our invitation-only Intelligent Network that fit their exact needs.
Firm engages top VoC firm for essential insight on target
Within 48 hours of the initial scoping call, the PE firm was introduced to two VoC firms that exactly matched all of their key criteria. The client selected their ideal choice. The PE firm was able to gain the customer insights they needed by engaging with the selected VoC firm and were ultimately able to gauge the relationships and satisfaction level between the target company and their current clients without wasting time or cost.
This month, BluWave founder & CEO, Sean Mooney, had the opportunity to join Devin Matthews on ParkerGale’s Funcast podcast to discuss how BluWave helps PE shrink the world by connecting funds to the exact-fit resources they need when they need them. Sean and Devin discussed how BluWave was born out of a pain Sean experienced during his 20 years in private equity and is made to connect funds to the resources they need when they don’t know who to use or their go-to providers are sold out. They also went into detail on the types of service providers BluWave invites into their network: specialists, spin outs, and independents that have specific capabilities they have provided to past PE firms in niche industries.
Other topics you can hear discussed in the podcast include how PE is evolving as well as how COVID has accelerated the digital transformation.
Interested in listening to the whole podcast yourself? Click below.
A PE fund principal came to us with an immediate need for a strategy session facilitator for their software portfolio company. Having recently acquired the business, the fund wanted to quickly get the portco into strategy sessions so that they could start defining long-term goals. Needing structure for these sessions, they were looking for a facilitator that was a former executive or management consultant and had software industry experience. They immediately needed someone to remotely lead the session and help the portco form and prioritize goals. We promptly worked to understand the nuances of their need and then leveraged our data and human ingenuity to match them with two select strategy session facilitators. The client selected their ideal choice and was so pleased that they have continued to use this resource across their entire portfolio.
A PE fund came to us with a critical need for an ERP selection consultant for their portco in the manufacturing industry. Since acquiring the portco, they knew that the company’s older ERP system would need to be replaced. Knowing that the selection and implementation would be a lengthy process, they were urgently seeking a consultant with experience in the manufacturing industry at the same scale as the portco that could guide them through what needed to be evaluated before making a selection and then manage the entire process. After quickly understanding the key needs of our client, we were able to match them to a curated couple of ERP selection consultants in our network within 24 hours. Selecting their ideal choice, the client was able to quickly and confidently kick off their ERP selection process.
Read the full case study here. Have a similar need that you would like to connect with us on? Contact us here and a team member will be happy to begin helping you within 24 hours.
Firm immediately needs strategy session facilitator for portco
A PE firm principal came to us with an immediate need for a strategy session facilitator for their software portfolio company. Having recently acquired the business, the firm wanted to quickly get the portco into strategy sessions so that they could start defining long-term goals. Needing structure for these sessions, they were looking for a facilitator that was a former executive or management consultant and had software industry experience. They immediately needed someone to remotely lead the session and help the portco form and prioritize goals.
BluWave identifies top consultant with software experience
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade strategic plan facilitation needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of strategic plan facilitators that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria, and then connected the client with two select pre-vetted facilitators from our invitation-only Intelligent Network that fit their exact needs.
Firm engages strategic facilitator to formalize and structure portco goals
Within 24 hours of the initial scoping call, the PE firm and portfolio company were introduced to two PE-grade strategic plan facilitators that had software and prior executive/management consulting experience. The client selected their ideal choice. The PE firm was able to confidently hold a strategy session for their portco that was expertly structured and facilitated, leading to clear and defined long-term goals for the company.
With PE funds fighting an uphill battle last year amid a global pandemic, Q2 2020 industry reports were shrouded in uncertainty. Across the globe, organizations fought against a looming economic collapse as businesses folded and life as we knew it shut down for months.
Despite the shifting tides, we witnessed first-hand the resilient nature of the private equity industry. Around this time last year, we published our analysis of the National Bureau of Economic Research’s study on PE and financial fragility that found that PE-backed companies were more resilient and rebounded more quickly than their non-PE-backed peers during the crisis.
One year later, we’re seeing that the study held up…and then some. In the last 18 months, the PE industry has shown tremendous growth despite an ever-changing economic environment. In PitchBook’s Q2 2021 US PE Breakdown, it was reported that middle market and billion-dollar deals are reaching unprecedented levels “thanks to the speedy economic recovery, demand for high-yield debt, an abundance of dry powder, and the looming threat of a capital gains tax hike.”
The report outlined how surging LP activity has brought not only the PE industry but also those it supports from harrowing lows to meteoric highs in just a few months. Here are some key highlights from Pitchbook’s Q2 findings:
Overall Market Trends: A Record-Breaking Year
PE firms have closed on 3,708 deals worth $456.6 billion in H1, which is about two-thirds of the total deal value for 2020. H1 2021 is also on track for a record-setting year in PE exit deals.
The Q2 inflation pop is signaling a move toward a potential rate increase by the end of 2023. The core consumer price index increased by 3.8%.
The White House’s proposed increase from 20% to 39.6% in the marginal capital gains rate has “spurred a dealmaking frenzy.” Pitchbook is seeing business owners race to realize profits from sales before the end of the year.
Areas of Growth: The Driving Factors
Funds worth $5 billion or more (“mega-funds”) accounted for the bulk of capital raised, “but both middle-market managers and first-time funds are also finding success as the increased appetite for PE benefited funds of all sizes.”
Corporate bonds and private debt also accrued significant activity in Q2.
Investment in cybersecurity is on the rise. PE dealmaking in software continued to post was strong in Q2 2021 and cybersecurity emerged as a particular area of focus. This makes sense, as the pandemic also engendered an increase in remote-work-related cybercrime.
Distributions to LPs and high returns numbers across all fund sizes are set “to provide additional tailwinds” moving forward. Also, platforms that saw significant expansion under PE sponsors are now coming to market and achieving healthy valuation step-ups.
As our economic recovery continues, many PE firms and PE-backed companies can start to look past pandemic-related issues and get back to their missions: building and scaling stronger businesses. Having the hard data to demonstrate the powerful buoyancy of private equity, we can move forward confident that it’ll take more than a sudden recession to curb this industry.
To read the full Q2 report, visit Pitchbook’s site here.
Interested in gaining more detailed Q2 insights? Check out our Q2 report here.
A PE firm came to us with a critical need for an ERP selection consultant for their portco in the manufacturing industry. Since acquiring the portco, they knew that the company’s older ERP system would need to be replaced. Knowing that the selection and implementation would be a lengthy process, they were urgently seeking a consultant with experience in the manufacturing industry at the same scale as the portco that could guide them through what needed to be evaluated before making a selection and then manage the entire process.
BluWave identifies best-fit provider
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade ERP selection needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of providers that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria, and then connected the client with three select pre-vetted consulting firms from our invitation-only Intelligent Network that fit their exact needs.
Firm engages provider to aid with ERP selection and implementation
Within 24 hours of the initial scoping call, the PE firm and portfolio company were introduced to the PE-grade ERP selection consulting firms that specialized in the manufacturing industry. The client selected their ideal choice. The PE firm was able to confidently drive an excellent outcome without wasting time and cost and the portfolio company was able to quickly kick off their ERP selection process.
At first glance, Troy Templeton is a stereotypical private equity managing partner demonized by the click-bait driven media machine and industry detractors as “people in charge of thrashing companies only to fill Steven Schwarzman’s pockets.” Is part of his role at Trivest to make money? Of course, because that is the role of any business. But when I spoke to Troy—who joined the “oldest private equity firm in the Southeastern United States” in 1989—he told quite a different story than the general public is used to seeing in the headlines.
From his “Just Say No” philosophy to Trivest’s proven “Path to 3x” methodology, Troy considers his main job as the firm’s leader to be “acting as a steward of any business we put its dollars into”; thus, preserving the positive aspects of the culture and providing incentives for founders to take their business to the next level instead of cashing out to fulfill their childhood dream of racing cars (which some inevitably do). With all the disruption happening around us, it’s nice to hear about those who value hard work, job creation, and stability over the long-term—while prioritizing high-growth and money-making. Perhaps this is the headline we should all strive to attain, despite the naysayers’ seeming grasp on the narrative.
Sean Mooney: I’ve heard you say “we run a business not a deal shop.” What do you mean by that?
Troy Templeton: From the beginning of Trivest (1981) the investment philosophy was always about finding good deals and working with companies to make them more valuable. At first, this meant doing a couple of deals a year. But over time, the realization was that we needed to build a scalable business model for PE, otherwise we would just be a deal shop. In order to consider ourselves a business, we worked on the three main components of an investment (deal sourcing, deal execution, and value creation), and put process, data, and strategy around each one of them to make it scalable.
SM: Any chance you will open the kimono on how this works, even on a high level?
TT: Well, for starters, in terms of deal sourcing: we used to source about 300 deals per year, which translates to roughly 25 a month. In June 2021 alone, we sourced 418 deals; and we will likely end up sourcing around 4,000 deals this year. That’s over 10x in deal sourcing compared to what it was with the old model. We’ve done that by investing heavily in this area, and almost 20% of our firm iscomprised of business development professionals. We are not reliant on a single source of deals; instead, we source from multiple channels and have a strategy for finding opportunities in each of those channels. We no longer have to wait for good deals to find us because we are proactively going out with a dedicated team and finding them.
With regard to deal execution, it really comes down to differentiating in a crowded market. In other words: how can we convince an owner to choose us based on things other than price? Our model eliminates pain points for the seller with our “Just Say No” philosophy. This pertains to saying “no” to things like requiring them to reinvest proceeds, aggressive capital structures, requiring heavy debt burdens, escrow requirements, and indemnification or working capital adjustments. We want the seller to see us as stewards of their life achievement. We want to be fair and transparent where both parties feel good afterward.
Lastly, it’s about value creation. This is what PE is all about. In public markets just 4% of public companies triple their value over a five-year period; but 75% of Trivest companies triple their value over five years. This value creation process is called the “Path to 3x.” Every company has six areas of focus: category of one (differentiate), management, measure what matters, organic growth strategy, acquisition strategy, benchmarks to measure against greatest companies. If we can work with a company to align and execute on these areas, that is where the real value is created, and ultimately money is made.
SM: If you’re a founder-owned business considering private equity as a path for expansion and growth, what are the most important questions to ask potential PE investors?
TT: The first question is “will I have to reinvest?” Not all founders will want to do this, but they never ask the question upfront. We had a very successful investment (it was a 10x deal) where three of the key players wanted to reinvest nothing. They wanted a 90-day “out” plan so they could go race cars. Most PE funds wouldn’t invest in this situation, because for the most part, they want founders to reinvest.
The second question is “will I receive 100% of the purchase price at closing?” This question is important from a deal perspective. The devil is in the details, and some term sheets will require all these costs (escrows, working capital adjustments, seller note, earn-out, etc.) that will lower the purchase price significantly. Owners should understand what they will get at close.
I also think owners have a responsibility to ensure their company has a proper chance to succeed, and it shouldn’t be just about the seller maximizing value. An owner should be asking themselves whether the company will be better off five years from now if we do this deal. So, this translates to the third question: “how much debt is going to be on my business moving forward?” Businesses fluctuate, and if an appropriate capital structure is not in place for the company to help it weather whatever storms occur over the next several years, then both the buyer and seller lose. To avoid this, Trivest has a policy of only using senior debt and no more than 3x of operating cash flow.
SM: Have any investments you’ve made outperformed your expectations? How and why?
TT: We purchased a small plumbing business in Kentucky about four years ago and used the “Path to 3x” to build it up significantly through roughly 15 add-ons. During the pandemic, the business started thriving. With each add-on, the founders remained in place after they sold. We minted over 20 people becoming millionaires: this was a life-changing event for most of them. Additionally, 100 employees were shareholders—since we believe strongly in bringing as many employees into the equity of the business as possible. It was such an amazing thing to witness and play a role in, as this isn’t something you normally see in a privately held business.
SM: In terms of “Topgrading”—a term that simply means ensuring the right people are in place—how do expert, third-party resources play into that?
TT: The key to Topgrading isn’t just about the CEO and C-level. It’s also about the next two layers below the C-suite. This is where you can make a dramatic difference, but unfortunately, far too many companies don’t focus on it. I think this is why Trivest has been growing so quickly, because we’ve used this concept in our own company, and it works! Our business development team is filled with great people who “own” their function, and as a result we’ve been able to build a culture of success around it. For any organization, this is an important part of overall company health. While leadership has to come from the top, if you don’t empower other levels of the organization to thrive, then you essentially build a layer of dependency into the process. When that happens, it becomes nearly impossible to scale.
SM: Add-on acquisitions are a core part of the Trivest playbook. In your opinion, what are a few elements that ensure a smooth transition and integration process?
TT: We’ve done about 75 in the past couple of years. Truthfully, some worked and some didn’t—but that’s all part of the risk portion of being an investor. Here’s what we’ve learned:
First up, there has to be a business fit. A lot of people will buy companies when there isn’t a reason for the companies to be together. It’s just about size and irrelevant to the core business; you see this a lot with tech companies. In addition to business fit, there also has to be a cultural fit.
Second, communication must be prioritized in order for the integration to work. You have to be transparent, otherwise, people will think the worst about what’s going to happen (read: they think they are going to get fired). This uncertainty leads to poor performance, and ultimately, people leaving whether this was part of the plan or not.
Third, and likely most importantly: you need a “butt on the line.” Someone has to be responsible for the transition, and you need a dedicated resource to be held accountable for any missed opportunities or failures (and successes too).
SM: If private equity didn’t exist, what would the economy look like?
TT: This may seem hyperbolic, but (especially after 2020) it would be in shambles. Private equity is a key component of liquidity, and a key buyer in every major, essential industry. If PE didn’t exist, founder and/or family-owned businesses could only sell to strategics or a management team. You’d have more public companies, which on average perform poorly compared to PE-backed companies—as I noted earlier. The focus may largely be on cost savings and making money, and wouldn’t necessarily account for people or culture. In short: there would be fewer options for selling, with worse outcomes for the companies post the sale.
Also, to wit, you never hear about the other side of the PE-equation: what these companies we invest in do for their families, communities, and partners. Most founders who realize their life’s goal by selling their business don’t immediately go out and buy a yacht and a new mansion, rather—they typically invest in other companies, provide security for their families and become much more philanthropic. Yes, sometimes they pursue their hobbies like racing cars…but that’s generally the exception and a small part of their overall net worth.
Without private equity, there would be no vehicle for most investors, large and small, to participate in the most vibrant and growing part of our economy—lower and middle-market companies. PE is an important growth engine of the economy, and the economy wouldn’t be nearly as robust.
SM: What is one thing you wish everyone understood about private equity?
TT: I wish everyone would think of us like the Meghan Trainor song “It’s all about that bass”—except for us it’s: “It’s all about that growth.” If we are growing, then our companies are going to do well. From the frontline workers to the founder to the investor, it’s a win-win. Money is simply a byproduct of being a good steward and helping a company grow. [drops the mic]
BluWave works with over 500 PE funds from around the globe, connecting them with pre-vetted, best-in-class, interim executives and small groups across a variety of resource and functional areas. From information technology and manufacturing to healthcare and consumer goods, our clients are paving the way for “Industry 4.0.” In other words, they have their heads in the game and their hands on the pulse of news you can use.
Check out the latest, curated collection of reports, insights, and musings from a handful of our PE funds.
Parker Gale recently launched a three-part series on boards on its Private Equity Funcast. In the latest episode, the team talked to Jason Heltzer, Managing Partner at Origin Ventures and a professor at The University of Chicago Booth Business School, about what makes a good board member — as well as the behaviors to look out for and avoid.
Sun Capital Co-founder and Co-CEO Marc Leder was recently featured on The Deal’s Behind the Buyouts Podcast. In this episode, Leder speaks about how Sun Capital has invested more than $13 billion since its founding in 1995, and how he’s navigated the past quarter-century of dealmaking. You’ll also hear about the firm’s deals in “healthcare, bedding, and its increased focus on technology companies, as well as the efforts of private equity firms to build up companies to create value.”
One year ago in July, TCV published this Q&A with Peloton Co-Founder and CEO John Foley and TCV GP Jay Hoag. As a throwback, we’re revisiting this interesting conversation in which Foley discusses how the fitness industry was “ripe for disruption,” why early investors were hesitant about Peloton’s approach, why culture and social responsibility are increasingly important to business success, and how to navigate the road to the IPO.
While “the theory on minimizing a firm’s cost of capital is straightforward enough,” Heartwood Partners argues that it has not been the best way to create equity value in a sustainable fashion. This model is reliant on the business succeeding and growing, which may not always be the reality. In this piece, Heartwood makes the case for why debt leverage is not “all it’s cracked up to be.”
