PE Firms Archives - Page 40 of 45

Top 8 Best Practices for Preparing for a Value Maximizing Sale

June 11, 2021 Sean Mooney

In today’s competitive markets, private equity companies and their partners are being forced to pay record-high prices for investments in companies. To generate attractive returns, the private equity companies and their managers must create substantial value after closing. One effective way to create value is by running a highly prepared, efficient, and focused sales process. Here are eight best practices for preparing a company for a value-maximizing sale:

Run fast
Time is the enemy of any business sale process. It gives interested buyers the opportunity to overthink diligence items, get bogged down in excessive analysis, and find reasons why they shouldn’t pay the most full and fair market price.

It also extends the opportunities for customers, suppliers, and competitors to discover that your company is in a sales process, which can lead to myriad distractions and unforeseen consequences. From the day your investment banker sends out teasers and a confidentiality agreement, your goal should be to sprint to the finish line.

Perform diligence on yourself
One of the biggest things that can bog down a sales process is when interested parties discover aspects of the business that are different than those represented in offering materials. Not only does this slow the process down, but it also gives counterparties the opportunity to re-negotiate price and terms, often late in the process when the seller’s relative power in the process can diminish.

To avoid this, it is well worth the time and money to do diligence on yourself. Hiring quality of earnings advisors, tax advisors, and even market sizing, competitive landscaping, and IT consultants to do pre-diligence will give you much more confidence going into a process that you won’t encounter a surprise that could impact time and value. Additionally, many of these pre-diligence service providers will enable you to share their findings with interested parties, which will ultimately help you run an even faster and more certain process.

Be prepared to answer key questions
Almost all interested buyers will want to know (i) revenue and gross profit by customer and product over time, and (ii) detailed statistics regarding the size of your addressable market and your related market share. It will be to your benefit to stay prepared with these detailed answers before you start a business sale process.

If you’re not prepared, it is likely that buyers will insist that you take the time to prepare such detailed analyses. Taking the time to do them in the middle of a process is often very distracting, stresses internal resources, and slows down processes at the exact time you don’t want to be slowing down.

Organize your files
Interested buyers are not going to part with substantial sums of money to buy your business without doing comprehensive due diligence. This includes very detailed reviews of nearly every financial report and contract that is relevant to your ownership period (and likely even beyond your ownership period). Take the time in advance to organize all your contracts and financial report and summarize the key terms of all meaningful contracts. Your sponsors, investment bankers, and attorneys will give you guidance on where to focus your attention.

Hire high-quality investment bankers
Investment bankers are experts at maximizing value in the marketplace. The best investment bankers not only know how to pitch an indicative valuation and run a broad process, but also have pre-established relationships with the relevant buyers for companies like yours and an understanding of how your company could or should fit into the strategies of the most likely buyers. Hiring the right investment bankers almost always pays for itself.

Hire high-quality attorneys
Just like investment bankers, hiring the right attorney can add significant value to your sale process. It is more than likely that your buyer will have a highly capable attorney that solely focuses on mergers and acquisitions transactions.

You should also have a highly capable attorney who can adeptly negotiate prevailing market terms and efficiently and effectively protect your interests from liabilities that survive after the initial closing. A good attorney should also know what’s important and not try to win every point in your favor. An M&A transaction involves a lot of give and take. The best attorneys know that intelligent compromise is needed to close a deal.

Polish your presentation
Interested buyers aren’t just buying a company; they are buying the management team. It is imperative to have strong contributions from each of the key members of the management team. Presenting canned PowerPoint presentations, however, is not necessarily the day job of your functional area leaders. Practice, practice, and more practice is critical.

Private equity sponsors and investment bankers also serve as great sounding boards and fountains of feedback and advice as they participate in these types of meetings on a regular basis. There are also professional management meeting presentation advisors that can add tremendous value by giving arms-length feedback and advice free of natural bias that occurs with your existing relationships. We know some really good, PE-tested presentation coaches if you need this type of resource.

Staff up
Preparing for and managing a business sale process is an unbelievable amount of work. Your company is not staffed to manage this level of surge demand. Most of the workload typically falls on the finance staff. Hiring interim staffing to support this surge demand is tremendously valuable in terms of making sure that information requests are met in a timely manner and your company continues to run as well as possible during a trying time.

Moreover, the costs of these interim support personnel are relatively minor as it relates to the total transaction value and can typically be allocated as transaction-related add-backs and closing expenses. BluWave has this world mapped and can quickly pair you with the right group or person to support your finance staff during this critical time.

After working feverishly for years on building and growing your company, the sale process is your final opportunity to monetize the full value of your company for the benefit of you, your team, and your investors. Take every opportunity to prepare in advance, bring in strong advisors and business support resources, and run a fast, competitive sales process so you can optimize the outcome of a rarely-occurring cornerstone event.

May 2021 Roundup: Insights from Private Equity Clients

June 2, 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 private equity 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 Global Head of Portfolio Management Dennis Hall was tapped for his thoughts on the evolution of due diligence in a Real Deals article by Andros Payne. In the piece, Hall explains that to agree on and execute the path to value, leaders in due diligence must focus on “understanding the team and organization’s capability to execute.”

This past month on Parker Gale’s Private Equity Funcast, PG partner Kristina Heinze talked to Director of Global Events for WomenHack Lisa Hudson. In the episode, they discuss WomenHack’s approach to promoting gender equality in tech and helping people get hired at companies across 125+ cities around the world. Plus, find out more about Lisa’s experience working for companies and in roles across the globe.

Last month on the Middle Market Growth podcast, Sun Capital Partners Managing Director Dan Florian and Principal Stephen Cella w3r3 n to talk about Sun Capital’s strategy for investing in health care. They discuss how Sun Capital measures the effectiveness of initiatives designed to improve the patient experience, plus how they work with the management team of their dental client, ClearChoice.

Bridging the gap between business and operational data insights, Cognite uses machine learning to enable large amounts of information to be ingested and contextualized to be leveraged in a range of use cases. In this case study feature, TCV digs into how Cognite — one of TCV’s “potential franchise companies” is becoming the category leader by improving data’s accessibility and governance and shortening the time to value and scalability of high-ROI applications.

You can also find insights from more private equity clients in last month’s roundup here.

Private Equity Interview with TCV General Partner Susan Clark

May 26, 2021 Sean Mooney

Susan Clark is an insightful force who spent nearly a decade in Dell operations prior to getting bit with the private equity bug. While watching Silver Lake Partners lead the privatization of Dell, a publicly-traded, end-to-end technology solutions company, Clark recalls: “After observing the transformation process, I basically decided I wanted to be on the other side of the table. I was good at fixing things, making operational decisions to increase efficiency, and I knew I could take my expertise and apply it to many companies beyond Dell.” So, that is exactly what she did.

Her first move was to Vista Equity Partners, where she held both VP of Operations and Chief of Staff roles, focusing on operational excellence and driving value creation across the portfolio. Now, as General Partner of Portfolio Operations at TCV, she has developed an operations strategy and model that helps fuel sustainable growth across the portfolio.

From her residence in New York City—where she is coaching a newly acquired company’s exec team through their first 100 days—we spoke about PE’s current state of affairs and why she is so enthusiastic about the future. During the interview, we covered everything from “sustainable growth” to what “operational excellence really means”, and why interim executives and experts are “necessary for the ebbs and flows of company growth.”

Sean Mooney: At TCV, you developed a portfolio operations strategy and model. What went into that formula?

Susan Clark: We are a growth-focused fund that focuses on technology businesses. The model I developed is specifically rooted in figuring out what will fuel sustainable growth over the long term. My team and I get involved in diligence to scope out operational opportunities, then do an assessment to determine the biggest needle movers. This can be anything from an updated go-to-market strategy, implementing a customer success organization, and/or looking at the discipline around their product roadmap. Ultimately our goal is to develop an achievable strategy that will quickly drive value while also building a strong foundation for future growth.

SM: In roughly 35 words, what is your definition of “operational excellence?”

SC: From prospect to product to a new market—you are confident it is the right thing to go after. In other words, when you throw the dart, you know you’re landing on the right board.

SM: In your opinion, what are a few of the greatest challenges portfolio companies face?

SC: After having worked with so many different companies and leadership teams, it typically comes down to feeling confident about taking calculated risks. This is where portfolio operations within a Private Equity firm can be helpful. We have the operational experience to help alleviate concerns about entering a new market, expanding a sales team, or going after an M&A target. In a sense, we offer a boost of confidence and support them while they start making investments in people, products, and processes that drive growth.

SM: I’ve heard you mention a “partner approach” to investing in companies. What does that look like?

SC: I’ll start with what a non-partner approach looks like, for sake of context. Ultimately, this is when an investor comes in and takes the stance that they know the business and customers better than the company owners. Then, they begin executing a plan, blindly and with little attention to nuances or details about legacy people, products, or processes.

Alternatively, with a partner approach, an investor believes that the current company leaders should run the business. While they (current leaders) may not have the best strategy in place for growth, they still understand the ins and outs of the business. In essence, at TCV, we bring the coaching, but the actual execution lands on the executive team. If the executive team—or one or two leaders within it—prove they don’t have the right skills to execute on the plan, or they aren’t coachable, then and only then will we move to find a more suitable candidate. This approach is somewhat a part of the evolution of the Private Equity industry over the last decade.

SM: Why is access to third-party, expert resources invaluable to Private Equity funds and their portfolio companies?

SC: As you know, because this is BluWave’s area of expertise, the needs of portfolio companies ebb and flow as far as demand. Private Equity firms don’t want to staff up internally, because of the episodic nature of these needs. We use best-in-class, vetted resources—search firms, Salesforce implementation experts, interim executives, advisors, and more—to fill these gaps and save time, money, and effort in the long run.

SM: What surprises you (and what would surprise others) about private equity?

SC: Private Equity has this “big bad wolf” aura: we break down the door, come in to tear apart companies, then cut costs in unsustainable ways. In my experience, we instead want companies to grow and flourish. Fundamentally, we want to facilitate getting them to where we believe they can be. The media and Private Equity detractors do a wonderful job of perpetuating this negative narrative, but I think things are shifting in positive ways, particularly with the post-Covid growth happening across PE-backed industries and sectors.

SM: Most would think your role is very cut and dry. But this isn’t always true. What are some of the soft skills required to do your job well?

SC: Simply put, change induces anxiety, whether it’s good or bad change—and this requires special attention to quelling fear and stabilizing emotions. As such, a large part of my job is coaching, and it squarely sits in the bucket of “valuing people.” Additionally, a key aspect of my role is rallying a company around a revamped mission or growth vector. I need to influence them toward the vision and get buy-in. I also have to ensure the CEO, executive team, and employees feel supported. This requires awareness, communication, and transparency. Presenting a spreadsheet filled with sales targets is one thing, listening to them voice fears about any aspect of executing a plan is quite another. I have to be able to do both.

SM: Finding the right talent is key and many companies can’t find talent fast enough. Would you rather step in as a CEO or spearhead HR.

SC: Hands down, CEO. HR is probably the hardest job on the planet, especially right now with so many changes and complexities in the current business environment. My hat goes off to them, but I’ll take the “chief job” any day of the week.

The views and opinions expressed are those of the author and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not verified the accuracy of any statements by the author and disclaims any responsibility therefor. This blog post is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified above are not necessarily representative of all TCV investments, and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies/. For additional important disclaimers regarding this interview and blog post, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.

Why Companies Should Consult A Private Equity Coach

May 25, 2021 Sean Mooney

Even the most talented athletes never reach their full potential without great coaches. Beyond the ability to see elements of their players’ game that need to be improved or reinforced, effective coaches can motivate players by setting goals, holding them accountable, and providing the right resources for growth and development. While players are responsible for their performance on the court or field, coaches can help them play better than they ever thought possible.

As the CEO of a platform that helps connect private equity (PE) firms with third-party resources, I’ve observed that this isn’t unlike the relationship between these two entities. Just as coaches provide plays, strategies, and training, PE firms give companies the tools they need to improve their products and services, ensure their operations are as efficient as possible, and increase their productivity. To take full advantage of the coaching PE firms can provide, companies have to know who they are and where to find them as well as how to build healthy relationships with them.

What PE Firms Can Bring To The Table

Companies often misconstrue the role of private equity firms. Instead of viewing them as partners, they often regard them more narrowly as sources of capital. It’s long past time to abandon the reductionistic perception of relationships between PE firms and their portfolio companies as strictly transactional. This view maintains that PE firms pump cash into companies, cut costs wherever they can and sell those companies as quickly as possible. Beyond the fact that the median holding period in 2019 for PE firms was 4.5 years, PE firms report that they’re more interested in building strong companies than trying to make overnight profits.

Most PE professionals have worked with hundreds, if not thousands, of companies and have previously been through many of the trials that companies are otherwise experiencing for the first time. Their experiences help them advise which strategies are most likely to be successful and which resources can be used to execute plans most effectively.

Like coaches, PE funds conduct rigorous assessments of companies’ performance on fundamental metrics (such as market share, customer churn, top-line growth, customer concentration, and profit margins), provide objective appraisals of what’s working and what isn’t, and allow access to the right resources necessary to drive accelerated improvements.

The Process Of Choosing Your Private Equity Coach

The global economy is becoming more dynamic, skills-based, and competitive every day. A recent World Economic Forum report explains that the rapid pace of technological change is leading to major shifts in the types of workers companies employ, while a significant majority of the companies say they’re needing and investing in specialized expertise.

PE firms aren’t just a source of financial support; they also offer just-in-time access to the specialized expertise that companies need to navigate the evolving global economy, especially at a time when we’re recovering from the most significant downturn in years.

In order to get the right fit when it comes to choosing a PE fund partner, you need to do some work. Look for one that is aligned with your industry, the size of your company, and your culture. You should probe the firm on its ability to add value beyond just cutting the check. The best PE funds will have countless examples of how they helped others in similar situations.

If you’d like to take the traditional route to find the right firm, start with your own network. Talk to your acquaintances who have experience working with PE funds and ask for referrals. Next, you could seek out trusted investment bankers who regularly connect business owners with best-in-class PE fund investors in your end market. Lastly, keep in mind that there are networking tools like Axial that can make the process of connecting with PE investors easier. (Full disclosure: My company offers networking solutions for different applications in due diligence and value creation.) Deloitte reports that talent networks now account for billions of dollars in economic activity and hundreds of millions of hires around the world.

Making The Most Of The Relationship

While a private equity coach can have a huge impact, players ultimately have to take full responsibility. The same applies to companies that work with PE funds or advisors of any kind. They should be willing to confront problems honestly, put their coaches’ advice into practice, address failures and celebrate successes. It’s essential to establish norms of transparency and accountability early on in these relationships, and this begins with the alignment of goals and how to achieve them.

For example, what are your definitions of success? Companies and their PE coaches should ask this question right at the outset and arrive at an answer that makes sense to everyone. After deciding what success looks like, it’s crucial to determine which metrics will measure performance. With the scorecard in place, the next step is identifying the resources and capabilities companies need to achieve their goals.

At every stage of this process, open communication and collaboration are key. Both coaches and players need to feel comfortable asking tough questions and openly sharing their thoughts. When a company and its Private Equity coach listens, holds each other accountable and moves forward with a foundation of trust, shared goals, and collaboration, only then can they discover that they’re capable of far more than they imagined.

This article originally appeared on Forbes.com.

Private Equity Interview with LaSalle Capital partner & COO Kelly Cornelis

May 11, 2021 Sean Mooney

As the daughter of a retired sportscaster, Kelly Cornelis had little knowledge of the finance world growing up on the outskirts of Chicago. She entered college at Notre Dame as an English major and stayed there until her sophomore year—when one of her professors noticed her proclivity for math and suggested she enroll in some business courses. “I was immediately drawn to the analytical aspects of finance,” she recalls. This led her to an investment management class, where she had the opportunity to manage money from the college endowment and was given 200k to track stocks and invest on their behalf. The rest, as the saying goes, was history.

Today, she serves as a Partner and Chief Operating Officer for Lasalle Capital, where she is responsible for deal sourcing and execution, financial operations, portfolio management, and investor relations. Kelly is also a founding member of Chicago Women in Private Equity, is a member of WAVE and PE WIN (Private Equity Women’s Investor Network) and served as a Board Member of MBBI (Midwest Business Brokers and Intermediaries) and ACG Chicago. In 2018, she was named one of mid-market M&A’s “Most Influential Women” by Mergers & Acquisitions magazine.

I had the pleasure of sitting down with Kelly and picking her brain about appointing female CEOs, how to create value, and how to embrace change in all its various forms.

Sean Mooney: What are some investments you are most excited about at LaSalle Capital?

Kelly Cornelis: We are primarily focused on the food and beverage sector, and we are seeing a tremendous amount of innovation, particularly in the middle to smaller markets. Because we invest in mostly small businesses, family-owned operations, or entrepreneurs, it’s exciting to partner with these founders and support them as they grow—despite a tumultuous 2020.

One example is our portfolio company, Fresh Origins, the leading grower of microgreens and edible flowers in the U.S. It was founded over 30 years ago by a solo entrepreneur—he basically invented the category. He started with one greenhouse, and now we have over 30 greenhouses and over two million square feet of space in San Diego, California. Recently, we promoted his right-hand person to CEO, and she is steering the company toward rapid growth, given her vast experience and deep understanding of the niche industry landscape.

SM: The PE industry speaks generally about “value creation” continually. What does this mean to you, specifically?

KC: We look at this in a variety of ways, but we mostly focus on revenue, EBITA growth, and margin enhancement (implementing production efficiencies). We also try to assess the strength of the management team; then we spend time adding the right-fit experts and people to finance, operations, sales, and other areas of importance. Although this isn’t directly related to numbers, it comes through in the numbers. Simply put, strong teams made up of the right people are what enable value creation.

SM: 2020 was quite a year for the food and beverage sector. What were some positive results of the shifting pandemic world in terms of this industry?

KC: Our portfolio companies were extremely impacted by covid-19, as you can imagine, and as a result, we implemented crisis management tactics and protocols at many of our food businesses—which were broadly recognized as essential businesses. Three of our companies are in manufacturing, and they sell to restaurants, so after the initial shock of March 2020, we adjusted by reducing headcount (unfortunately), implementing safety procedures, while simultaneously increasing wages for employees putting themselves at risk. We even had one of our portfolio company CEOs working the production line because we had several people out sick. But many positive things came out of the pandemic as well. We became more efficient and also entered new sales channels. All of the companies are now performing extremely well and almost back to pre-COVID sales; and I think many of the changes we have seen in consumer behavior such as grocery delivery, take-out, and meal kits and increased focus on healthier eating will stick.

SM: How do you leverage interim executives and experts to create value within your portfolio companies? What resource areas are most “in demand” right now?

KC: We use interim executives for various reasons: if someone leaves unexpectedly, or need specific project expertise for ERP systems. We often bring in interim CFOs before we exit a business because we need extra help with the sale process. As far as experts in demand, covid-19 has created opportunities for new channels and new products. Using Fresh Origins again as the example, we are going into the retail channel, so we are looking for experienced sales executives and expert resources to help us take advantage of this opportunity.

SM: Above all else, what is the one quality you always look for in a leader—whether short-term project hire or long-term for company growth?

KC: We have seen different styles work in different situations, and not all leaders are cut from the same cloth. But the ability to problem solve is the key; being able to create solutions that move quickly and not get sidetracked or bogged down by every little obstacle that arises.

SM: Any advice for striking that elusive work/life balance, particularly in our increasingly virtual and 24/7 world?

KC: Being on devices all day is draining, compared to pre-pandemic when you were meeting someone in person for lunch or coffee. I’ve been trying to take technology breaks throughout the day—go for a walk or read a physical book. I don’t think we realize the impact this is having on our mental and physical health. As we move into the “new normal” we need to retain some balance and not let ourselves get sucked into our desks, our computers, and our phones.

SM: In one sentence, what was the biggest, unexpected change in 2020 that you are embracing in 2021?

KC: Being less scheduled, not attending kids’ birthday parties [laughs], and not commuting.

Private Equity Human Capital Executive Forum Event Recap

May 8, 2021 Kyle Johnson

Every quarter we gather top human capital executives across leading private equity funds to discuss key topics that are top of mind. In our most recent event, we covered many topics. Below are our top takeaways.

These events are invite-only and follow Chatham House Rules, so this only touches on our high-level learnings. If you are interested in joining our next event, please contact us at events@bluwave.net.

Return to Office: Though there was variance as to private equity funds approach how/if they will return to the office, Labor Day seems to be the flashpoint when most will begin their version of the “new normal.” In the meantime, office attendance seems to be voluntary, sometimes encouraged.

Some firms are using prolonged location flexibility as a recruiting tool for more junior employees, and others are trying a hybrid model, (all-firm Mondays, Deal Team A Tuesdays) to take advantage of the “organized serendipity” aspects of being physically in the same space.
Individuals are encouraged to share their “vaccine plan” but are generally not required to have it.
Questions arose around the attraction and retention of junior talent who prefer a flexible location plan—and how this may balance with the individual competitiveness in employees wanting to gain an advantage by being in person or preference with facetime.

Diversity, Equality, and Inclusion: Most firms are applying a more holistic approach when considering the diversity within the firm and portco structures, and some sort of diversity diligence and board reporting seems broadly applied.

Many firms are partnering with specialized recruiters or diversity-focused associations to maintain a diverse junior candidate pipeline.
To maintain a healthy pipeline of all junior candidates, some firms have introduced internship programs, or have made offers to investment banking candidates earlier in their careers.
A number of firms discussed using emerging public company standards for their portco boards.

Future of Work: There is broad acceptance that some things will likely remain different for the foreseeable future- either from a location flexibility perspective or a difference in frequency of business travel.

Firms are re-thinking what is required to be done in person (and in-office) and what can be done remotely in order to maximize time together.
Business travel will likely be less frequent in the near term (i.e. dial into the monthly board check-in) but more concentrated and purposeful when it happens (i.e. the portco visit will be bi-annually and will be an intense 3 days of plant tours and management meetings). Some firms are limiting travel to more senior individuals so as to reduce juniors’ time away from other essential tasks.
Many firms have targeted and continue to hone all employees’ digital acumen to optimize communication and collaboration across people and teams, regardless of whether they are in-person or virtual.
Virtual work has prompted a focus on the importance of personality assessment tools (like Hogan) to help team members understand each other better and to accelerate remote relationship building.

HR & talent are a key area of focus for us and our clients. In fact, in our Q1 2021 quarterly insights report, we found HR and talent remain private equity’s top area of focus, accounting for nearly 39% of all due diligence and value creation initiatives by PE in Q1 2021. Activity levels in HR and talent continue to grow over time, comparatively accounting for 32% of projects in Q1 2020 and 25% of projects in Q1 2019. Within this category, we are seeing significant investments by PE in ESG and Diversity, Equity, and Inclusion (DE&I) initiatives.

You can find an overview of our quarterly findings here. To view the full deck, which includes detailed projects by functional area, as well as league tables, reach out to us at info@bluwave.net. A team member would be happy to share our full findings with you and tailor our insights to be most relevant to you and your fund.

April 2021 Roundup: BluWave Private Equity Client Insights

May 3, 2021 Kyle Johnson

BluWave works with over 500 private equity 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…

In this podcast episode from ParkerGale’s “Private Equity Funcast,” Partner Jim Milbury is joined by Ted Bililies, Managing Partner at AlixPartners, to share the results of the Sixth Annual Private Equity Leadership Survey. The pair discuss value creation, human capital, due diligence, and leadership in the wake of a tumultuous year.

“Change and complexity can provide for significant opportunities for leading software vendors.” In this deep dive case study, TCV examines how AxiomSL, a leading provider of cloud-enabled software for governance, risk, and compliance regulatory reporting solutions to the financial services industry, found growth in the global financial crisis. Their secret? Adapt quickly and focus on talent strategy.

“While you might think you’ve picked a great time to launch your fundraising, it’s not so easy to sync up your timing with prospective LPs’ forward calendars.” In this deeply retrospective blog post, partners at Parker Gale revisit their lessons learned from their experience raising their first fund. Plus, they share insight into the landing and maintaining relationships with Limited Partners.

This one is a throwback! This time last year, MiddleGround Capital published their manufacturing-focused webinar to help companies understand how PE can help support infrastructure. In the video, MiddleGround partners John Stewart and Scot Duncan are joined by Thomas and Industrial Exchange to discuss what private equity is and how it can work with manufacturing companies and we press on through the coronavirus pandemic.

You can also find last month’s roundup here.

BluWave’s Proprietary Insights Report Shows Private Equity Industry Making Significant Investments In Growth And Development

April 29, 2021 Kyle Johnson

Private equity Intelligent Network finds 70% of PE activity was focused on value creation initiatives during the first quarter of 2021

NASHVILLE — BluWave, a private equity-focused Intelligent Network, today released new data on how private equity funds and their portfolio companies are allocating resources as the economy turns a corner. The results of the report demonstrate that during Q1 2021 the majority of company leaders prioritized investing in growth and people-oriented specialized groups that could accelerate performance during the economic recovery underway. Value creation activities have increased from 56 percent in Q4 2020 to 70 percent in Q1 2021.

“While the economy seems to be moving in a positive, steady direction, not all companies are recovering at the same rate,” says BluWave founder and CEO, Sean Mooney. “We are seeing the private equity industry making investments to ensure the rising tide is lifting all boats.”

BluWave’s proprietary insights report includes data from thousands of projects initiated by the PE industry. Key findings include:

HR and talent remain private equity’s top area of focus, accounting for nearly 39% of all due diligence and value creation initiatives by PE in Q1 2021. Activity levels in HR and talent continue to grow over time, comparatively accounting for 32% of projects in Q1 2020 and 25% of projects in Q1 2019. Within this category, we are seeing significant investments by PE in ESG and Diversity, Equity, and Inclusion (DE&I) initiatives.
Market strategy advisory was PE’s top activity in due diligence during Q1 2021, accounting for nearly 38% of projects. This compares to 24% of activity in Q4 2020. Market strategy advisory is a common, time-tested practice in the PE industry, leveraging insights to inform growth opportunities for new investments. This shift in Q1 2021 signals significant and growing investment activity by private equity across the U.S. and global economies.
HR and talent accounted for nearly 45% of PE value creation activities during Q1 2021. This compares to 40% in Q1 2020 and 30% in Q1 2019. The PE industry is taking broad action to bring in people with the right skills to grow and develop companies as Covid begins to recede in the U.S. and a new normal is emerging. BluWave is also seeing strong ongoing investments in operations, sales and marketing, and technology capabilities for portfolio companies.

Adds Katie Marchetti, managing director of BluWave: “We anticipate continued strong investments in value creation in 2021 and are seeing a surge of new investment activities underway as a significant number of business owners seek capital from the private equity industry.”

How to Build A Resilient Company in Changing Times

April 21, 2021 Sean Mooney

Do you have a resilient company? Does it navigate shifting tides easily, or do your leaders and teams struggle with every minor disruption? What makes certain people better equipped to roll with the punches?

According to bestselling author and ADP Researcher Marcus Buckingham: “people don’t fear change, they fear the unknown.” To use a timely example, if your company is attempting to rush back to “normal” (going into a physical office, business travel, etc.) he suggests having a concrete plan that offers visibility to senior leadership and their teams as to exactly what this will look like.

Simply put, it’s not enough to send a company-wide email that says: “Okay folks, starting Monday, business as usual!”

Furthermore, according to his recent study on building resilient teams: Only 17% of the workforce feels “highly resilient.” Clearly, company leaders across business types, industries, and geographies have a tremendous amount of work to do in the area of building a resilient company.

Another interesting finding of note is the correlation between experiencing constant change and resilience. The data show that workers who experience five or more changes at work are 13.2x more likely to be resilient.

To help make the findings actionable, Buckingham breaks down the workforce into three categories: (1) senior leaders, (2) team leaders, and (3) self. For each bucket, he offers tips for how to help build resilience more effectively, based on questions posed to each group. These include things like vivid foresight and visible follow-through; anticipatory communication and psychological safety; and a sense of agency along with doing work we love.

If you’re a company leader, I highly recommend checking out the full study, or his related article What Really Makes Us Resilient in Harvard Business Review. (Bonus: Take his “Gift of Standout” assessment for free here.)

Interview With Forrester’s CMO Executive Partner Sheryl Pattek

April 15, 2021 Kyle Johnson

As Forrester’s Executive Partner serving CMOs and Chief Experience Officers, partner, Sheryl Pattek regularly works with senior-level marketing executives to advance their major initiatives, with a special focus on creating customer-obsessed strategies that drive business growth. She has been named “CMO Whisperer” and “One of 18 People in Marketing You May Not Know, but Should,” as well as “one of the thirty most influential women in marketing technology.” Prior to joining Forrester, Sheryl spent over 30 years leading global marketing organizations for both Fortune 500 and early-stage companies in the logistics, transportation, software, software-as-a-service (SaaS), technology, and telecommunications industries.

Are you impressed yet?

Candidly, as a career marketer, she is both inspirational and intimidating at the same time; but gratefully acknowledges she is continually learning and transforming just like the rest of us. When I requested an interview recently, she graciously accepted and dropped knowledge in areas ranging from how to measure marketing success to why interim CMOs are more important now than ever.

Kyle Johnson: Why is due diligence in digital marketing important?

Sheryl Pattek: When you are doing M&A it is imperative to dig in to see what is really there, versus what you are being told on the surface. As today’s consumers and business buyers prefer to engage in digital channels, it is important to understand the tech stack and get a picture of what products are currently used to manage overall customer engagement. It’s also extremely important to know what the data looks like (is it “clean” data or does it need extrapolation) and who owns the data. To create a connected customer experience in today’s digital environment both a strong tech stack and robust data are critical. Customers will accelerate decision-making if they have a good experience, and if not they will “vote with their feet” (and go right out the door) as the saying goes. So, digging into both areas to ensure they are solid is vital to achieving the value a specific M&A is looking for.

KJ: How do you measure the ability of a company’s marketing function?

SP: In terms of its ability to drive growth, the first thing I look at is the business plan and the marketing plan to determine if they are aligned. In a B2B environment, marketing is seen as a driver of growth, owning part of the pipeline and new customer acquisition, in addition, to cross-sell and upsell opportunities. So, alignment between the business and marketing plan ensures that the marketing team will deliver or exceed expectations. Next, I look at the KPIs to see if they map to business outcomes: I want to know the length of time it takes for a customer to make a buying decision, how many “touches” until someone buys, what the ROI looks like, and if they are doing attribution in a way that is actionable. Once I understand the baseline, I try to assess whether or not the existing marketing team has the core capabilities in place to implement go-to-market plans, customer acquisition strategies, or continuous improvement processes. Beyond that, do they have the ability to make data-based decisions and a 360-degree understanding of their customer base.

KJ: Is interim/fractional CMO a thing? Are you seeing this trend post-Covid?

SP: It is definitely a thing and a model that is growing quickly for several reasons. For midsize companies, the interim model is an efficient way of covering a tremendous amount of ground in a short period of time. Typically, as you likely know, it takes at least four to five months to find a full-time marketing executive. Then, once they are on-boarded, understand the business, and start having an impact, you are talking at least six to nine months. Even then, you don’t really know if you have the right fit.

The fractional model allows you to hit the ground running with very specific deliverables in a short period of time. It enables you to then iterate quickly. If you are midsize to a smaller company, you may have a marketing organization of doers in place. An interim CMO can quickly provide strategy and some leadership to kickstart results and accelerate growth. Then, you’d have the flexibility to bring in a fractional CMO episodically, as needed.

KJ: Any insight for hiring a fractional CMO?

SP: If you’re a CEO looking for interim talent, my number one suggestion is to not do it on your own. By tapping into experienced, robust networks, you can find a resource that fits culturally, skills-wise, industry knowledge-wise, and many times even geographically. The typical CEO is not going to have a deep well of interim experts at their disposal.

KJ: What is marketing’s role in creating value for a company?

SP: First and foremost, building and driving a growth engine. Second, bringing customer understanding to the c-suite so decisions are made from the outside in. Third, typically marketing is thought of as owning the company brand. But I prefer to think about the value marketing creates as going beyond just the brand. It’s marketing’s role to link together the brand’s value, the customer’s experience, and employee’s experience to provide the necessary underpinnings of the growth engine.

KJ: Last but not least, what is one marketing trend you’re seeing emerge in 2021.

SM: There are quite a few, but the one companies need to adjust for now is related to data privacy and the changes being made with regard to third-party cookies. These sweeping changes underscore the importance of first-party data. In short, companies who own their own data will win.

Why Diversity is Key to Productivity and Innovation

April 6, 2021 Katie Marchetti

BluWave has worked with hundreds of companies across a variety of industries ranging from manufacturing and consumer goods to information technology and healthcare. Despite the differences that exist between them, one thing remains constant: for today’s companies, innovation and diversity are inseparable. There is no bigger obstacle to the introduction and refinement of new ideas than groupthink, which is why the most creative companies are the ones that encourage robust discussion and debate from multiple perspectives. Diversity is not just a matter of recruiting employees with different backgrounds – it is an ethos that your company should seek to cultivate at every level.

How Diversity Can Be An Engine Of Productivity

Diversity is not just a goal companies should pursue for its own sake – it is a way to pressure test ideas and come up with novel and effective solutions to problems. This is why it should come as no surprise that diverse and inclusive work environments often lead to higher performance. For example, a 2018 Boston Consulting Group study found that “increasing the diversity of leadership teams leads to more and better innovation and improved financial performance.” Meanwhile, according to Deloitte, companies with inclusive cultures are twice as likely to meet or exceed financial targets.

Certain forms of diversity can lead to a reduction in negative outcomes for companies as well – a report from MSCI ESG Research found “fewer instances of governance-related controversies such as cases of bribery, corruption, fraud and shareholder battles” with boards that included women. However, while eliminating bias and increasing representation are essential to the health of a company, these are ways to address a more fundamental issue: diversity of thought.

When companies prioritize diversity of thought, they do not just become more innovative – they are also better able to identify and hedge against risk. Companies that value diversity of thought have access to a broader range of viewpoints and insights, and they make employees feel like stakeholders whose contributions are welcomed and appreciated. In turn, these employees are empowered to offer their perspectives without reservation and speak freely to managers about problems that need to be addressed.

Challenges To Diversity & Inclusion

A commitment to diversity and inclusion begins with equitable hiring practices, but this is an area that has always been rife with bias and discrimination. For example, studies in Sex Roles and the Proceedings of the National Academy of Sciences have found that female, black, and LatinX candidates were viewed as less competent and hirable than their peers. There is also evidence that women think they need to be more qualified than men do when applying for the same positions.

There are many ways to address these inequities in the hiring process. First, determine exactly what you are looking for in a candidate and consistently measure potential hires against a specific set of criteria. This can reduce the bias associated with subjective in-person interviews and identify a larger pool of qualified applicants. Second, develop lists of pre-vetted candidates (this is what BluWave provides to our clients) so you know everyone under consideration already meets your requirements, regardless of race, gender, etc. And third, consider hiring employees on a project-to-project basis (what I call the agile workforce). This will naturally bring a broader range of perspectives to the company because it means new employees are being hired on a regular basis.

Diversity in all its forms is becoming a top priority for companies in many different industries. To compete, the first step is building your hiring strategy around the discovery and recruitment of candidates who meet your needs and bring unique skills and experience to the table.

Promoting Diversity In All Its Forms

Companies are increasingly prioritizing diversity across a broad range of categories. As we discussed above, this does not just mean increasing demographic representation – it also means creating an inclusive culture that facilitates open dialogue and cooperation at every level of the company. Real diversity and inclusion require companies to listen to employees, take their contributions seriously, and amplify the widest range of voices possible. There are many forms of diversity – from racial to geographic to socioeconomic – and companies should celebrate and learn from all of them.

According to Gallup, one of the reasons one-third of employees feel disengaged at work is the perception that their viewpoints and concerns are not taken seriously. The survey found that just 30 percent of American employees strongly agree that their opinions seem to count at work. This should be a disconcerting fact to any company that values the diversity of thought – the majority of employees feel like their contributions are being dismissed, which will make them less inclined to offer suggestions and point out problems when they arise.

This is the opposite of inclusion, but companies can change course by actively seeking feedback via the voice of the employee platforms (which can highlight instances of bias or discrimination), encouraging managers to be receptive to all points of view, and breaking down silos that can separate departments and teams from one another.

Diversity is a word that pops up on corporate websites and in training handbooks often, but company leaders often have a superficial commitment to making their workplaces more diverse. But this status quo is rapidly changing as companies increasingly recognize that an emphasis on diversity does not just make the world a fairer place – it also leads to happier, more innovative, and more productive workforces that will have a greater economic impact.

The original version of this article appeared in People Talk.

March 2021 Roundup: BluWave Client Insights

April 1, 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…

Demand is increasing for automation technology solutions in warehouses and distribution points. Baird lays out “a set of advanced, fully integrated solutions that deploy differentiated technology to support supply chain executives as they tackle these challenges.” These include warehouse management software, machine-to-machine technology, real-time tracking, robotics, and interoperability. Despite progress made in this area, “there is still much work to be done in the face of accelerating demand drivers.”

As the global economy recovers from the 2020 fluctuations, Heartwood Partners lays out key areas that they observed successfully generated value “within our investments in addition to the straightforward improvement of growing sales and profitability.” Among the list are: broadening or adding key functional management, reducing concentrations, enhancing throughput and capacity, improving customer service, upgrading IT systems, and developing succession plans.

“While you might think you’ve picked a great time to launch your fundraising, it’s not so easy to sync up your timing with prospective LPs’ forward calendars.” In this deeply retrospective blog post, partners at Parker Gale revisit their lessons learned from their experience raising their first fund. Plus, they share insight into landing and maintaining relationships with Limited Partners.

We can learn a lot by watching the failures and successes of some of the world’s most profitable companies. Netflix is one such example. In this case study analysis, TCV examines the journey of the company from its origination to its recapitalization to its current value. As TCV puts it, Netlix’s “drive to market leadership includes plot twists and cliffhangers as surprising as those in the company’s original films and TV shows.”