Function: Operations

Pricing strategy expert needed to drive demand

Firm needs pricing strategy expert for consumer products portco

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

BluWave identifies top pricing strategy experts for industry

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade pricing strategy needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of pricing-focused strategic consulting firms that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria and then connected the client with the select pre-vetted pricing strategy experts from our invitation-only Intelligent Network that fit their exact needs.

Firm engages ideal choice to maximize response rate and demand

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

Video: Dealing With Service Providers at Capacity

June 18, 2021 Kyle Johnson

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

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

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

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

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

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

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

 

 

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. 

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.

How We Did It: Healthcare Turnaround and Performance Improvement Case Study

February 9, 2021 Sean Mooney

A multi-site healthcare provider portco was in need of turnaround expertise to help improve their growth-stalled performance. Moving quickly, we worked to thoroughly understand the client’s specific turnaround needs. Tapping into our Intelligent Network, we were able to match the client with a resource who fit their exact requirements (including geographic location) and was able to efficiently start moving on the strategy. In the short-term, the PE fund was able to quickly gain confidence in the interim executive. In the long-term, the PE fund hired the candidate full-time to lead and execute the turnaround plan. 

 

For the full story, read the case study here.

How we did it: Digital marketing due diligence case study

February 5, 2021 Sean Mooney

Our PE fund client needed a resource to perform digital due diligence for an e-commerce-enabled aftermarket products business. They needed a full overview of the digital landscape, including SEM, SEO, UX, conversion path analysis, Google Analytics, and digital GTM strategy. We used our extensive experience in digital marketing due diligence to immediately connect our client with expert groups from our invitation-only Intelligent Network. They used the insights gathered from the chosen digital marketing group to make an informed decision and quickly close on the investment opportunity. Ultimately, we were able to help the client find a clear path forward. 

For the full story, read the case study here.

Urgent Interim CEO To Provide Turnaround, Performance Improvement

Interim CEO immediately needed for healthcare portco

A PE firm VP came to us with a critical need for an interim CEO for their multi-location healthcare services portfolio company. The portfolio company was experiencing stalled performance and the firm was urgently seeking an interim CEO that could turn around this problem and improve performance. They not only needed the resource to have the necessary skills but also required that they be in the same city as the portfolio company’s headquarters in order to limit travel concerns.

Using pre-vetted network, BluWave finds exact-fit candidate

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade interim CEO needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of interim CEOs that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria and then connected the client with the select pre-vetted providers from our invitation-only Intelligent Network that fit their exact needs.

Firm engages candidate to lead company turnaround

Quickly after the initial scoping call, the PE firm was introduced to a PE-grade interim CEO who was local to the portfolio company’s area and specialized in multi-location company turnarounds. The PE firm confidently engaged the individual and after an initial assessment and interim service, was so pleased with the individual’s work that they hired the executive full-time to lead and execute on the turnaround plan.

Interim CFO Needed to Quickly Integrate New PE Platform Portco

An interim chief financial officer with relevant niche experience was needed

A private equity firm purchased multiple IT managed services companies with the intention of integrating them into one streamlined platform. The firm needed an interim chief financial officer immediately, but they did not have time or patience to sift through scores of unvetted, mixed-quality candidates. Rather, they wanted a candidate from a targeted subset of pre-vetted, PE-grade interim CFOs that fit their specific needs by company size, budget, industry, culture and geography. Crucially, the firm also needed an interim CFO who both understood the IT MSP environment and had a proven track record of successful financial integrations.

BluWave learned the need and matched the requirements to our pre-vetted resources

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade interim CFOs. We utilize these frameworks to map, assess, monitor, and maintain deep pools of the select interim professionals that meet the private equity standard. In this instance, we interviewed the PE firm to understand their specific key criteria, and then matched these criteria to the right pre-vetted candidates from our invitation-only network.

The PE firm was quickly introduced to a targeted selection of interim CFOs that fit their exact needs

After interviewing a discrete number of custom-fit candidates, the PE firm chose their preferred candidate. This person started working within two weeks of the firm’s initial outreach to us. This interim chief financial officer quickly gained the trust of the portfolio companies’ leadership, successfully consolidated financial reporting across the two separate companies, and ultimately paved the way for the new permanent CFO. The PE firm was able to drive an excellent outcome without wasting time and opportunity costs.

We pride ourselves on our ability to know the market of the niche expert resources our clients need before they need them.

How to Run Your PE Fund Like a Business

May 8, 2018 Sean Mooney

There are currently more than 4,000 private equity funds competing for limited opportunities. Economics 101 is hitting the PE industry hard: since the demand for investment opportunities has been growing and the actual number of opportunities has stayed consistent over time, PE investors are facing an uphill battle. To succeed in a crowded field, PE funds must now run their own organizations like their portfolio companies.

Private equity funds are in the business of taking enterprises operating below full potential, growing their value, and selling them at a profit. And while PE investors focus on improving the operations and value of their portfolio companies, they often overlook the management of their own fund.  Don’t let the cobbler’s kids have no shoes. PE investors need to learn to look at their funds the way they look at their portfolio companies, with an eye for increasing opportunities and optimizing operational effectiveness across the fund’s lifecycle.

The Business of Private Equity
Much like target businesses, PE funds typically have a Front of the House (deal and human capital origination), Operating Engines (assessing investment opportunities and post-closing value creation), and Back of the House (fund administration and fund operations).  The business of private equity must increasingly be more business-like to succeed in today’s increasingly competitive environment.  The good news is that most PE funds have tremendous opportunities to improve how they operate and differentiate from the pack.  In this post, we focus on the low hanging fruit within your Front of the House and Operating Engine.

Front of the House

Knowing How to Market your PE Fund
Gone are the days of investment opportunities finding you simply because you have capital to invest.  There are too many funds competing for the same deals.  One of the hardest jobs for investment bankers now is knowing where to cut the deck for a sale process.  Branding and marketing efforts are essential in the competitive PE world. PE funds must use marketing to source new deals, raise funds from investors, and recruit new talent for their internal needs and to their portfolio companies. The same marketing tools that are applied to portfolio companies can and should be applied to PE funds.

PE firm members should take the time to determine and hone what differentiates their fund from the competition. This brand positioning exercise requires thorough research into the market, as well as feedback from firm members, limited partners, and portfolio company leaders. It’s often beneficial for PE funds to work with third-party marketing experts who will take an unbiased approach to their research and can help develop effective brand messaging.

Once you have your brand messaging figured out, your fund should be using digital marketing to raise and regularly reinforce awareness.  It amazes us that virtually no funds are using these tools other than episodic emails tied to new deals.  The good news is that early adopters have a green field opportunity to differentiate.  If interested, we know excellent agencies that will be great for both you and your portfolio companies.  And when you’re ready to execute, we can also point you to the best technology tools like CRM, implementation groups, and data providers to get the job done.

Using Human Capital Assessment Tools
Many PE funds are already using human capital assessment tools for their target acquisitions. Far too few are using these tools to support their own teams.

Many, if not most, PE professionals (including me) came from the investment banking ranks.  I think most will agree that these institutions have many strengths; however, training their professionals to lead and manage highly effective teams is not always one of them.  The school of hard knocks gets results for sure, but a lot of china tends to be needlessly broken in the meantime with morale and performance suffering as a result.

Human capital assessment tools can benefit PE funds by identifying opportunities for structural improvements in the organization, as well as people who have the right skills to positively affect change and fit within your existing group dynamic. PE funds can also use the results of their HR intelligence initiatives in their marketing and recruiting efforts by pointing to standout results they’ve created.  We have a particularly relevant group that can help understand your team dynamics, improve group cohesion, and guide future hires.  Their method helps the Israeli special forces do the same and can be just as helpful to you (as well as your portfolio companies).

Back of the House

Tuning up your operational engine
Many PEGs are now adding operational resources to the internal teams, ranging from operating partners, to project support QBs, to full blown portfolio support groups.

We regularly see a common flaw in the private equity operating support model.  In this model, the private equity operating professionals usually come from senior level industry positions in varying end markets where they bring true executive and operating excellence experience.  In their prior capacities as senior executives, they led highly functional teams to execute on their vision and related strategy.  However, when they join the private equity fund as an operator, they often find themselves in an army of one, where they formulate the vision, often have to single handedly determine the strategy, and then typically execute it themselves while navigating varying degrees of pushback from the portfolio companies.

Your operating professionals should be acting like they did before joining as an operating executive: assess the situation, set the vision and strategy, and support / manage the execution (without doing the execution).  Very few firms can afford however to build their own full blown internal AT Kearney (nor should they).  The good news is that there is a world of excellent third-party resources that your operating executives can manage in conjunction with your portfolio company leaders to execute on identified opportunities. When chosen and managed correctly, you’ll get better outcomes, the cost won’t be borne by your management company and is variable at the portfolio company level (and often add-backable at sale time), and operating partners will have significantly more leverage to impact your broader portfolio versus getting bogged down on individual projects.

Learning to Outsource
Highly-trained PE firm members shouldn’t be wasting hours Googling the solutions to industry-specific problems their portcos are facing—going down these rabbit holes can cause firms to lose thousands of dollars per hour per professional in opportunity costs (run the math – it’s not for the faint of heart, though). PE firms must become more comfortable outsourcing projects to consulting professionals with niche skills and industry expertise so that their teams can focus on their core competencies.

BluWave can quickly and efficiently connect you with vetted, PE-tested service providers who can tackle the projects your internal teams shouldn’t. Our invitation-only expert network includes specialized consultants who can help assess opportunities, build value, and complete projects with more speed and certainty—for PE firms’ internal teams or their portfolio companies.

Partnering with BluWave is the first step towards running your PE firm more like a business. Contact us today to learn more about how we can create value for your firm.