PE Firms Archives - Page 39 of 45

Common Mistakes to Avoid When Preparing A Company for Sale

July 17, 2021 Sean Mooney

After a nearly 20-year career in private equity, I’ve learned to appreciate that it takes just as much work to effectively sell a company as it does to excellently buy a company. It’s also easy to slip up or not pay enough attention to vital steps that could profoundly change the final price upon sale.

Sellers make a number of common mistakes during sale processes, including a lack of advance preparation, not knowing key questions about themselves, and not appropriately resourcing the business to concurrently run operations and support a sale process. Each of these mistakes causes sellers to lose credibility and slow down their process, which, in turn, increases real and perceived risk, and inevitably kills value.

To help get better outcomes, here are the three most common mistakes we see made when selling your business and how to fix them:

Lack of Preparation

As a private equity investor, we made it our business to optimize the sale process. We would talk virtually every month about the right time to sell various businesses. When we finally decided it was the right time to sell, we, of course, wanted to be in the market within six weeks of our decision. Even with professional sellers of businesses like PE investors, this decision is often followed by all sorts of scrambling by investors, portfolio company teams, investment bankers, lawyers, and related support professionals to get ready for sale. For family-held or entrepreneurially-held businesses with fewer resources and less experience selling companies, this process is multiple times more chaotic.

Don’t try to squeeze months of work into six weeks: preparing for sale should start well in advance of the sale process. Taking some time in advance will enable you to run an aggressive process while also effectively running your business at the same time.

We recently held a management forum for a top private equity find and their managers, during which we discussed best practices for planning for sale. The key takeaway was preparing for sale should start years in advance, ideally the day the first wire from investors clears, so you can hit the market at any moment when the time is right.

Not knowing yourself before you’re asked

Time and time again on the buyside, I’ve asked fundamental questions that should have been known by the sellers, but weren’t. When we asked these questions, the process had to slow down as their team hustled to find the answers. These slow-downs give everyone in the process time to rethink assumptions and value.

Make sure you know the following key items before you start an M&A process because you’ll most likely be asked these right at the time you can least afford to pause your process:

The size and growth rate of your direct markets
Your company’s market share in their addressable markets and how it compares to competitors
Volume, revenue, and profitability by customer and product over a trailing 3-year period

Once you know these elements, incorporate them into a detailed financial model that projects your performance over the next five years (make sure you also have monthly projections for the next two years). If you do this, you’ll build credibility with buyers and disarm much of the skepticism that naturally occurs during sales processes.

Also, try your best to predict what buyers will be asking during the sale process. Have open conversations with your investors, executives, and investment bankers to understand your strengths and weaknesses. Save yourself from having to scramble to produce appropriate reports and information in the heat of the sale process. Having a general idea of what buyers are looking for and preemptively having answers to those questions, disseminating the information to those who need to know, and confirming overall readiness will ensure that buyers feel confident and comfortable when meeting with you and your team.

Truly best-in-class companies bring in third parties to pre-opine on the state and opportunities of the business. Spend a little money on pre-due diligence, including sell-side quality of earnings reports, tax diligence, market studies, and IT. The cost is minor as it compares the value of the company, and these third-party stamps of approval from credible advisors will give your buyers confidence that the company is what it is and not see (or go looking for) ghosts during the sprint to the finish line.

Under-Resourcing with Interim Staff

The single biggest mistake I saw time and again during my private equity career was understaffing the sale process. It’s nearly impossible to both aggressively run a sale process and proactively run your company.

Most sellers’ intuition is to put the bulk of the workload on their investment bankers’ shoulders. Your investment bankers can help, but you are not paying them to be your accountants, lawyers, market strategists, and data entry specialists. You hire top investment bankers to intimately know the buyers, appropriately frame the opportunity, and manage a process to optimize valuations. Don’t distract them by getting them bogged down in the weeds. Let them focus on the job you hired them for and they’ll deliver outstanding results.

Every business undergoing a sale process should bring in some level of interim staff (ranging from interim controllers to interim CFOs) to either help with the production of analyses and data requests or help manage day-to-day operations. This is a relatively small expense compared to the sums that will be gained by running a fast and credible process. If you don’t resource appropriately, something usually has to give: either your sale process, your operating results, or both.

We work daily to help top private equity firms, and their portfolio companies and proactively-managed independent companies more effectively assess opportunities and build value. It’s hard to know who is good: we make it our business to be the expert of experts.

Find out how we can help you during due diligence, value creation, or the sale process!

Video: Q2 Insights Overview

July 16, 2021 Kyle Johnson

Every quarter our team analyzes the projects we work on with our 500+ PE fund clients to get a bird’s eye view of the market. In this video, our leadership team shares the trends we are seeing across due diligence and value creation. Watch the video below to learn more.

If you would like to get a copy of the report, reach out directly to your BluWave contact or our team at insights@bluewave.net and we’ll be happy to assist.

Digital marketing expert needed with experience in food manufacturing

PE Firm needs digital marketing expert for food manufacturing target

A middle-market PE firm came to us with a critical need for digital marketing expertise for a snack food manufacturing company they had an LOI with. Knowing that digital marketing was going to play a key role in their go-to-market strategy, they urgently needed a PE-grade digital marketing expert who had proven expertise in the industry to come in and take their digital marketing to the next level, with the ultimate goal of helping the company grow post-close.

BluWave uses pre-vetted network to identify exact-fit providers

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 resources 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 digital marketing agencies from our invitation-only Intelligent Network that fit their exact needs.

Firm engages ideal, PE-grade digital marketing expert

Within 24 hours of the initial scoping call, the PE firm and portfolio company were introduced to two PE-grade digital marketing agencies that specialized in the food and beverage space. The client selected their ideal choice. The PE firm was able to confidently drive an excellent outcome without wasting time and opportunity cost and the portfolio company was able to quickly fill this critical need and execute their aggressive growth strategies post-close.

Large Cap VP urgently needs post-merger integration support

Post-merger integration needed for healthcare portco

A PE firm vice president of portfolio operations came to us with a critical need for post-merger integration support for their healthcare services company. They were five months into the value creation plan for the portco and were in the process of due diligence for an add-on that had a high chance of being executed. They urgently needed someone to come in and lead the post-merger integration efforts at the portco that had healthcare services experience, specifically in the benefits market.

BluWave identifies pre-vetted, PE-grade provider with industry background

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade post-merger integration needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of merger integration resources that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria and then connected the client with a select prevetted post-merger integration group that fit their exact needs.

PE firm introduced to exact-fit post-merger integration support provider

Within 48 hours of the initial scoping call, the PE firm and portfolio company were introduced to the exact-fit match and were so pleased that they decided to quickly engage with them. The PE firm was able to confidently drive an excellent outcome without wasting time and opportunity cost, and the PE firm was able to promptly execute their merger integration goals for their portco.

Interim CHRO Needed to Quickly Spearhead Departmental Change

Firm needs interim CHRO for multi-site portco

A PE firm came to us with a critical need for a head of HR for their multi-location healthcare services company. With the current head of HR leaving and an ineffective HR department, the healthcare services company needed a strong HR leader with role and industry expertise to come in and restructure the entire system in 3-6 months. Already with ~1000 employees and additional acquisitions on the horizon, they urgently needed a local interim CHRO leader that could be boots on the ground in HQ during the pandemic in order to quickly spearhead change.

BluWave presents PE-grade interim executives with industry expertise

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade interim CHRO 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, and then connected the client with the select pre-vetted interim CHRO candidates from our invitation-only Intelligent Network that fit their exact needs.

Firm selects top choice to serve as interim CHRO

Quickly after the initial scoping call, the PE firm and portfolio company were introduced to four PE-grade interim CHRO candidates that specialized in healthcare services. The client selected their ideal choice, allowing them to quickly retain this critical role without wasting time or cost. The candidate ended up being such a great fit thanks to their background in M&A, PE, and healthcare, that they were flipped to the organization’s permanent position after only three months of serving as an interim resource.

Interim talent means more equitable environments for the future of work

July 14, 2021 Katie Marchetti

As the chaos and uncertainty around the pandemic starts to settle and businesses dust off the debris of the last year, it’s becoming clear that a new world of work is upon us. What many were predicting would soon be the “new normal” is now the actual normal—especially when it comes to work. The transition back into physical office spaces does not mean the end of remote work. Instead, companies are embracing a hybrid workforce.

Hybrid work combines virtual and onsite employees, whether on alternating days or on a permanent basis, and is a trend that companies are embracing across the country. A recent report from Gartner revealed that 59 percent of companies intend employees to work remotely occasionally, while 32 percent are allowing remote work full-time. For many leaders, however, this now means transitioning again into a new working style: one that facilitates productivity and collaboration among in-office and virtual workers (think: all-hands meetings with half the team sitting together at a conference table and the other half calling in from Zoom).

This is why project-based work is on the rise. Instead of onboarding full-time employees remotely, which has been one of the biggest challenges for HR leaders during the pandemic, companies are calling on skilled experts to complete tasks on a contractual, as-needed basis. As we drive ahead in the new normal, project-based workers will be fueling the future of work.

Project-based work is an integral part of a successful remote workforce

Across the 1,000-plus private-equity-based projects BluWave supported in the last 12 months, one thing stood out: investments in people continue to be the number one focus area in 2021. While technology has helped companies to adapt to remote work, hiring employees who have the skills to work with the technology has been even more valuable.

Hiring workers for specific, often discrete, projects means you can vet candidates based on their ability to meet the demands of that project. Using an Intelligent Talent Network can help you match potential interim workers to those interim needs. This model works well for private equity firms, from senior partners to portfolio company executives, because it engenders trust and rewards results. If you hire people who are skilled, action-oriented, and self-motivated, you can set goals and give them “rope” to freely deliver the best result. Ultimately, project-based work ensures that rewards are aligned and incentives are rewarded in exchange for top performance, which is more difficult to achieve with a more amorphous scope.

Interim work means more equitable environments

Hiring based on a potential employee’s ability to perform against predetermined, outcomes-based objectives helps eliminate bias (unconscious or not) in the recruitment process. According to Harvard Business School, “In recruiting … unconscious bias and affinity bias often express themselves as a preference for one candidate or another because of ‘culture fit.’ Resumes may be selected because of a shared alma mater, or because of an unconscious bias to one name over another.”

When hiring for a long-term fit, companies may choose to give preference to candidates who meet unspoken criteria off-paper—because culture-fit and soft skills are generally more relevant for full-time employees. With project-based work, it’s the results that matter. If someone has a track record of success, they meet the criteria. It’s that simple. Plus, in this system, rewards are made equitable, too. If your project scope is clear, you can offer fair and just compensation for the work that is done—it provides equality of opportunity to perform.

Creating collaborative environments with distributed workers

The key to effectively utilizing project-based workers is putting the right systems in place to seamlessly integrate them into the existing processes and work efficiently across project stakeholders for the duration of their contract.

Clearly defining and communicating goals from the onset, delineating established deadlines, and integrating collaboration tools into operations will help leaders stay on top of a project. These are hallmarks of agile development, which involves short, project-to-project scrums with siloed teams that collaborate consistently through the scrum. Research has shown that agile teams are 25 percent more productive than their industry peers because team members focused on one task at a time.

You can also implement clear structures for assigning roles and accountabilities. A RACI chart is a tried-and-true matrix used to assign roles on a project. A properly used RACI outlines who is responsible for executing tasks, who is accountable for the work, who is consulted throughout the project, and who is informed on project progress. This helps eliminate confusion, reduce duplication or redundancy, and ensure those deadlines are met.

For a workforce still in flux, those equipped for project-based work act as connective tissue and can build the foundation for future stability. Companies that embrace this wave of “normal” will likely be the ones that ultimately find themselves in a winning position.

This article originally appeared in HRFuture Magazine.

Interim CFO Urgently Needed after Abrupt Resignation

Firm has immediate need for PE-grade interim CFO

A PE firm came to us with an immediate need for an interim CFO for their automotive aftermarket company. With the existing CFO transitioning out within two weeks after an abrupt resignation, they needed to act fast to find a replacement. Not having the time to sift through candidates, they critically needed a candidate from a focused set of referenced, PE-grade interim CFOs that understood the automotive aftermarket and the nuances to the complex accounting and financials associated with this type of organization.

BluWave connects firm with in-network, pre-vetted interim executives

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade interim CFO needs. BluWave utilizes technology, data and human ingenuity to pre-map, assess, monitor, and maintain deep pools of interim CFOs 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 candidates from our invitation-only Intelligent Network that fit their exact needs.

Firm engages their top choice to fill the role

Within 24 hours of the initial scoping call, the PE firm and portfolio company were introduced to the first candidate that had CFO experience in the automotive aftermarket industry. After a series of interviews, the client selected their ideal choice that was able to start immediately and was open to converting to a full-time role. Because the candidate was such a perfect fit, the PE firm decided to convert them to full-time from the get-go. They were able to drive an excellent outcome by quickly retaining this role without wasting time or cost.

June 2021 Roundup: BluWave Private Equity Client Insights

July 7, 2021 Kyle Johnson

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.

Baird Capital’s venture team partner, Benedict Rocchio, was tapped for a Crain’s Chicago Business roundtable on the future of work. In this recap, he shares his thoughts on “solutions, strategies, and resources shaping the future of work and what business leaders should anticipate for their organizations.”

How we did it: Pricing strategy expert needed to drive demand for consumer products portco

June 30, 2021 Kyle Johnson

A PE firm came to us with a critical need for a pricing strategy expert to maximize revenue at one of their consumer products portfolio companies. Since competing against big-box retailers, the portco realized their need to set pricing that clearly conveyed the value of their offerings to their price-conscious and value-driven consumers. We quickly worked to understand the client’s nuanced needs, leading us to promptly introduce them to two PE-grade pricing strategy experts with extensive experience in the consumer products industry. The client selected their ideal choice, and the PE fund was able to achieve its objective of maximizing response rates and demand through strategic pricing and an aggressive seasonal promotional schedule.

Do you have a similar need or any other specific need we can help you with? Contact us here and we will be happy to help you.

Read the full story here.

Pricing strategy expert needed to drive demand

Firm needs pricing strategy expert for consumer products portco

A PE firm came to us with a critical need for a pricing strategy expert to maximize revenue at one of their consumer products portfolio companies. Since competing against big-box retailers, the portco realized their need to set pricing that clearly conveyed the value of their offerings to their price-conscious and value-driven consumers. They set this objective as a top priority and urgently needed a PE-grade pricing strategy expert that had experience in the consumer products industry and could set a pricing and promotion strategy to maximize response rates and demand.

BluWave identifies top pricing strategy experts for industry

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade pricing strategy needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of pricing-focused strategic consulting firms 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 pricing strategy experts from our invitation-only Intelligent Network that fit their exact needs.

Firm engages ideal choice to maximize response rate and demand

Quickly after the initial scoping call, the PE firm and portfolio company were introduced to two PE-grade pricing strategy experts that specialized in the consumer products industry. The client selected their ideal choice. The PE firm was able to confidently drive an excellent outcome without wasting time and opportunity cost and the portfolio company was able to quickly achieve its objective of maximizing response rates and demand through strategic pricing and an aggressive seasonal promotional schedule.

How We Did It: Head of Sales needed to drive value at a recently acquired portco

June 23, 2021 Sean Mooney

A private equity firm principal and portfolio company CEO came to us with a need for a Head of Sales for their healthcare logistics company. Since the acquisition, the portfolio company had been growing rapidly, and they needed to make key hires across multiple functions. Moving quickly, we worked to thoroughly understand the client’s specific needs. We introduced them to two sales recruiting firms that specialized in senior go-to-market roles in the healthcare space. After a thorough vetting process, the CEO made a decision and hired one of the candidates presented. To date, the partnership is a success and going smoothly.

Do you have a similar need in the interim exec area or any other unique need we can help with? Contact us here and we will be happy to help.

For the full story click here.

Video: Dealing With Service Providers at Capacity

June 18, 2021 Kyle Johnson

As the world begins to rapidly reopen from the pandemic, businesses have begun to run full steam ahead to catch up for lost time. This massive acceleration in business has left many go-to service providers in the PE industry at capacity due to the sudden surge in demand, leaving many firms wondering where to go next.

In situations like this, hundreds of the leading PE firms have come flocking to us, knowing that we can provide them with alternative providers through our extensive Intelligent Network.

Our Intelligent Network boasts the characteristics of both having a deep bench of PE-grade service providers and single shingle consultants.

In times like this, our broad list of resource partners allows us to keep a pulse on different providers’ availability, leaving firms with more time to focus on other initiatives while we determine what providers are available for them.

Additionally, our PE-grade single shingle providers empower our clients to find the same quality services they are accustomed to with their go-to providers, but for a much better value.

In the video below, former PE Partner and Bluwave Founder and CEO, Sean Mooney, shares his top three tips on what to do when your go-to resources are at capacity.

If we can help you connect with alternative providers during this capacity shortage, or help you with any other need, please contact us at info@bluwave.net and we will be happy to connect with you right away.