PE Firms Archives - Page 40 of 45

Women in PE Event Recap

June 18, 2021 Kyle Johnson

Every quarter we gather leading women in PE to discuss current industry topics and to offer smart women the chance to gather, share intel, and decompress with one another. In our most recent event, we discussed many topics and have listed our top takeaways below.

These forums are invite-only and follow Chatham House Rules, so listed below are high-level takeaways only. Are you in private equity and interested in joining fellow leading PE professionals during our next Women in PE Forum on September 15th? Please contact us at events@bluwave.net.

Deal Flow

Panelists and table participants agreed that the current flow of deals is historic in number, but reflective of years past, particularly past-recession and pre-tax changes. Funds are constrained by tight timelines and increased competition, higher price multiples, pressured budgets, and true scarcity both from diligence providers and internal fund capacity.
Funds have addressed this by focusing on deals they can win or where they have a unique angle for a seller. Some are even contacting banks in advance of the process with a pre-deal offering. When a “wanted” deal is identified, funds are full-court-pressing management team (including in-person meetings) and putting resources against it. Relationships with diligence providers have become more important than ever due to capacity constraints. When go-tos are not available, funds are taking the opportunity to try new providers identified through BluWave—connecting funds with specialized groups for a certain industry or geography.
Internal capacity constraints are real, as is junior professional burnout. Funds are leaning into the softer side (happy hours, team outings, etc.) to curate a sense of team and community, helping juniors feel tied to their firm and preventing turnover.

Holding Periods and Potential Tax Change Impact

Funds are trying to balance the opportunity to sell at significant multiples in this market, weighing the balance of higher short-term IRRs versus greater multiples of money with longer hold periods. Additionally, potential tax changes loom, encouraging companies to sell before the potential becomes a reality. BluWave is hearing from our contacts in DC that a changed capital gains rate will likely land at a lower rate than being proposed by the administration in the form of a compromise.
Few PE firms seem to be making firm-wide changes from a holding period perspective due to the impact of potential tax changes. That said, tax changes are pushing private owners (in an unprecedented way) to look at selling, amplified by the pent-up demand from the delayed covid period. Even 20-30 yr old industrials companies are considering sale for the first time.

Other Industry-Wide Observations

Travel: Flights are packed, and travel is generally more “pleasant” from a hospitality perspective—hotels being genuinely eager to please! That said, travel itself is more difficult due to limited flights, making the options more limited and forcing prioritization exercises. Annual meetings are split between remaining virtual (higher turnout) and in-person (more collaboration/relationship-development). The consensus on board meetings is that they will likely be ½ virtual and ½ in person.
In-office: Offices are coming back, depending on the region, though all will be in the “new normal” mode by Labor Day. In general, most firms seem to be at least partially virtual for the foreseeable future, and there is a trend toward a more casual dress code—notably involving more color!

We thoroughly enjoyed getting to gather with other leading women in PE to discuss these current industry hot topics. Here at BluWave, we are specialized to help you find service providers when your go-tos are at capacity.

Never worked with us before? Check out our How To Vet BluWave video to learn more about us and how we can help. And if you have an immediate need, contact us here and we will be happy to help you right away.

An Interview with Riveter Capital Founder Colleen Gurda

June 15, 2021 Sean Mooney

Anyone who has spent a significant amount of time in the private equity industry understands how difficult it is to “disrupt” the space. This has less to do with a lack of desire and more to do with the heaviness of the lift: being an innovator or a market leader is not for the faint of heart. But as we are discovering, after a year that rocked the globe and upended many aspects of our lives, now is the time to make strides and truly challenge the status quo.

For Colleen Gurda and her partner Sarah Abdel-Razek, they embraced the economic contraction and shifting tides of 2020 by founding New York-based fund, Riveter Capital. Passionate about supporting women and minority-owned or –led businesses in the lower middle market, they built their thesis around this underserved demographic and are on the hunt for quality founder- and family-owned businesses to partner with.

Case in point: When I hopped on a call to discuss everything from entrepreneurship to diversity to fractional talent, Colleen opened with: “It’s a little hectic today, we have three LOIs going out, so I’ll talk fast.” Her enthusiasm and passion are clear, and I have no doubt you’ll find her take on the future of PE to be filled with hope, realistic insights, and food for thought.

Sean Mooney: What was the genesis of Riveter?

Colleen Gurda: Having spent the majority of my career in a male-dominated industry, I knew the specific challenges many women in positions similar to mine faced—as well as the opportunities to do things differently. I’d been thinking about how I could combine my passion for women in business with my skillset, so when the pandemic hit and all these businesses owned by women and minorities were being disproportionately affected, I knew it was time to make the jump.

Women represent so many small businesses, but they don’t have access to capital. My partner and I saw a huge market gap in the PE world for these types of businesses in the $1M to $5M EBITDA range. We essentially close the “access to capital” gap, while realizing good returns for our investors.

SM: How did you overcome any “fears” about stepping out on your own and becoming an entrepreneur?

CG: I’ve always had an entrepreneurial itch but wanted to make sure I had the experience and credentials to be successful. After 15 years of investment banking and investing experience, I finally felt like I had the necessary tools to go out on my own. Having a partner in crime (Sarah) was also really important—both of us had the same vision yet complementary skillsets and the mutual support made the decision much easier.

Beyond that, during my years at other investment firms, I saw my peers moving upmarket only. So, I knew, from a competitive perspective, there was a chance to do smaller deals but have an outsized impact. The path to revenue growth was wide open and not oversaturated; this gave Sarah and me the confidence to test the thesis without the cost of having to outpace a lot of competition.

SM: You invest in minority-owned/managed businesses, but can you talk a bit more about your criteria for choosing companies in which to invest?

CG: Our core focus is women– and minority-owned and/or managed businesses. Right now, we are focused on companies with $10M+ revenue with $1M to $5M EBITDA in the areas of business services, manufacturing, consumer/retail, and healthcare services—although that will likely expand in the future. We are mostly interested in buyouts, founder ownership transitions, recapitalizations, growth and acquisitions, and rollup strategies. Beyond the leadership criteria, we look for fairly standard industry things like proven business models in stable industries, a strong value proposition, high free cash flow, and an identifiable value creation plan.

SM: Any examples of how a company you’ve been involved with saw positive economic impact by leaning into the idea of building a diverse workforce?

CG: We were recently involved with a waste management company specializing in waste collection, processing, and recycling. The organization had very little diversity on the teams, particularly in leadership positions, and no formal HR strategy. Our investment thesis was to formalize all policies and procedures, then top grade the management team. After implementing our suggested changes, the company attracted a more diverse workforce, which in turn embraced the ‘professionalization’ of the company. This included the way the company related to and communicated with its diverse customer base. As a result, the company improved its margins, increased customer retention, and was better positioned to win larger contracts from commercial customers.

SM: For middle market companies, why is access to fractional executives or specialized groups important?

CG: What we often see in the lower middle market are resource-constrained companies that can’t afford to build out a full team, or simply don’t have the bandwidth to manage growing their teams formally. At these companies, the CEO is also the COO and CFO, and probably more. Having access to episodic, expert teams and people is imperative for their growth.

Companies, like BluWave for example, allow us to bridge the skill gap until our portfolio companies are ready to hire full-time executives.

SM: What is one goal you have for 2021?

CG: As a fund, our goal is to prove the Riveter thesis, given there aren’t many (if any) firms out there doing what we are doing. We want to prove that there are really high-quality women– and minority-owned or –led businesses worth investing in, and that good returns are possible by looking at these largely underrepresented groups. While we do enjoy the fact that there isn’t much competition yet, I hope we inspire other investors to start thinking outside the box.

Video: How To Vet BluWave

June 14, 2021 Kyle Johnson

When you are evaluating external help to get you and your fund the resources you need, there are a number of questions you should ask, including:

What does your business focus on?
How many PE funds do you work with?
How many projects have you done with PE funds?
How do you know a service provider is PE-grade?
How long does it take to get results?
Why your business over any alternative options?

In this video, our team answers each of these questions. Watch to learn more!

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.)