Need: Prep For Sale
Jay Hernandez of Raymond James: M&A Process Best Practices
Jay Hernandez recently joined the Karma School of Business podcast, sharing his insights into the dynamic world of private equity.
In his discussion with host Sean Mooney, Hernandez, an investment banker focused on industrial technology, talked best practices in mergers and acquisitions.
He emphasized the importance or preparation, understanding buyer psyche and building trust and reputation.
Here are some insights from their conversation.
3 Takeaways from Jay
1. M&A Preparation
Hernandez emphasized the importance of thorough preparation before entering the market. This involves not just understanding one’s own business but also being ready for the intense scrutiny that comes with merger and acquisition processes.
“It’s never too early to prepare for that event,” Hernandez said. “You always have to be prepared.”
Mooney agreed: “The more you do that, the more luck you tend to have in business and life, but also M&A processes.”
READ MORE: Why Mergers and Acquisitions Fail
Hernandez also stressed the importance of talking to key players early in the process.
“Engage your advisors, engage your experts well in advance. And it could be even a year or two in advance,” Hernandez said.
Mooney said that doing so can ensure that all aspects of the business are aligned and ready for the sale process.
“You should probably be talking with an investment banker right now so that when that light is green, you’re getting an early start,” he said.
2. Understanding Buyer Psyche
Hernandez also pointed out the increased depth and detail in buyers’ inquiries within M&As.
“The psyche of the participants has changed, and particularly on the buyers, and where that’s changed a lot is the areas that they’re digging into and the depth of which they’re digging into,” he said.
Mooney underscored the need for sellers to understand and anticipate the buyer’s perspective. He highlighted the diligence PE firms conduct in preparing for M&A processes.
“Private equity firms are spending more time making sure things are absolutely buttoned up so that they’re prepared to move as quickly as possible through an M&A process,” he said.
READ MORE: Merger Planning & Integration: Best Practices for Private Equity Firms
3. Building Trust and Reputation
Finally, Hernandez emphasized the necessity for buyers to maintain integrity and straightforwardness during the M&A process.
“You need to make sure that you’re doing it right for the company that you’re looking at, because at the same time, you’re going to be their partner going forward,” he said.
Mooney cautioned about the fragility of reputation.
“It takes a lifetime to build a reputation and literally 30 seconds to ruin it,” he said.
Hernandez added that “99.999 percent of the groups that we deal with and the buyers that we deal with are straight shooters and do exactly what they’re going to say.”
READ MORE: Post-Merger Integration: Framework, Keys to Success
Hernandez’s entire conversation with Mooney offers unique insight into the world of mergers and acquisitions from an investment banking perspective. (Stay tuned until the end for a time- and stress-saving life hack about cooking the perfect steak.)
When you’re done listening, head to the main BluWave podcast page for more conversations with business leaders.
Jay Hernandez, Raymond James | M&A Market Dynamics: Essential Preparations for Buyers and Sellers
Decoding Q3 Insights: Harnessing People Power and Growth Opportunities in an Improving Market
Interim Executive Best Practices: Trends in Short-Term Leadership Roles
Why should a business use an interim executive?
It can be a great way to bridge the gap between full-time hires, give a potential long-term hire a “tryout,” train up less experienced candidates, guide a company through a crisis or even prepare a business for sale.
Whatever the case, interim CFOs, CMOs, CHROs, COOs and the like can be money well invested.
To get the most out of these temporary executives, though, businesses need to have a plan.
BluWave’s Richmond Donnelly discussed the best practices of using interim C-suite talent on a webinar with Mark Steenhoek, Managing Director, Operations, of The Stephens Group and Bryan West, Managing Director, Talent at Resurgens Technology Partners.
Here are some of the actionable insights you can apply to your business’s interim executive strategy.
When, How To Work with Interim Executives
While there are many situations in which an interim executive might be a good fit, the panelists outlined the most common ones their firms face.
“There’s good reasons and bad reasons that we would hire. I’d say that we find ourselves more in the camp with the bad reasons, and I’d describe those as two,” Steenhoek said. “It’s a crisis situation. Somebody leaves…or it’s a situation where we started looking in this a little bit more post-COVID in that we would have an open CFO role and then it takes nine to 12 months to fill it just because the market was so tight and difficult to find that perfect fit.”
West added that he is a big fan of the “try before you buy” approach. He said he’s encouraged by the number of his peers who are like-minded.
“That was actually reassuring,” he said. “That’s a great way to build a relationship and we’re always open to that.”
Top Interim CXO Use Cases
Whatever the use case, interim leadership is consistently one of the most-used services in the Business Builders’ Network, according to BluWave’s quarterly insights.
Based on the proprietary data collected from working with hundreds of private equity firms and thousands of leading businesses, the two most-used interim executives are CFOs and CHROs.
Read more about how each of these crucial roles is used:
Based on a live poll of webinar attendees, most PE firms fill multiple interim executive roles per year, taking 3-6 months to do so.
At BluWave, however, we connect you with a short list of exact-fit candidates within a single business day of your initial scoping call.
Why Hire an Interim Executive?
Beyond broader use cases, PE firms and their businesses usually have a specific set of tasks they need this temporary hire to complete.
“We’re able to go in and very specifically orient to on a project basis like, ‘Hey, does this person have experience or the skills to knock out kind of a more tactical list of things?’” West said.
He said that while the overall goal may be the same as when you bring in a full-time C-suite hire, the selection criteria is “quite different” based on what needs to get done.
Echoing BluWave data, Steenhoek said interim CFOs are their most common interim executive hires. The tasks each one is expected to accomplish tend to be the same, with variations depending on the company’s industry.
Interim Executive Criteria, Selection
Moving beyond the to-do list of items to accomplish, what is it that the world’s top PE firms and businesses look for in interim executives themselves?
West said that having done so many hirings in the past makes it easier to pick up on red flags in candidates. Beyond that, he relies on experience to choose the right person.
“We need somebody that’s been there, done that,” he said. “We don’t want to burn six months of time or three to six months of time on building a function.”
Steenhoek agreed, saying that is his top priority, too.
“I think the second would be, especially if it’s a leadership thing…radical transparency,” he said. “You’re just going to be able to really work together hand-in-hand, which equates to low-ego. They know what they’re there for.”
Setting Interim Executives Up for Success
Once someone is in the seat, the team that hired the individual plays a significant role in their success. How do these leaders set their interim hires up to get the job done?
“There is the team integration and the business integration [and] the CEO is the primary quarterback there, assuming it’s a direct report to the CEO,” he said. “But as far as project-managing the task list…that more often than not happens at our level.”
Steenhoek added two things that he believes are essential in these situations.
“I think really clear communication around what you need and alignment that they’re oriented and really focused on what you tasked them to do,” Steenhoek said. “The second is just being really clear on alignment related to, Are they interim? Are they permanent?”
BluWave is here to connect you with best-in-class, niche-specific interim executives to help with crisis management, leadership transitions, “try before you buy” and other relevant scenarios.
“Reach out to us at any point if we can ever be supportive with anything you all need,” Donnelly said. “We’re here to help you win.”
Contact our research and operations team to scope your needs and get quickly connected with the service provider you need in less than one business day.
Gabe Mesanza, Huron Capital | An Expert Perspective on Culture, Growth and Cash Flow in Private Equity
What To Do When Your Service Provider is at Capacity
Connecting with a service provider you can trust is like looking for a great dentist. Once you find “the one,” you wouldn’t put your teeth in anyone else’s hands.
The same goes for your business. After a successful engagement with a trusted third party, you save a lot of time by contacting them directly the next time you have a need.
There are reasons you have go-to service providers: they’re fast, reliable and they know your business.
But if you love them so much, you’re probably not their only client. Far from it.
So what happens when you reach out and they tell you they simply don’t have the capacity to take on more work on the timeline you need? Or worse yet, they give you their B-team.
We’re glad you asked.
There are a number of reasons service providers could suddenly be in high demand. A bounce-back from a recession. A surge in deal flow. A hot new trend of which everyone’s trying to stay ahead.
When this happens, BluWave is on standby with a deep bench of trusted, PE-grade third parties who can deliver the exceptional work you expect no matter what your industry.
In fact, we experienced this post-COVID recovery when the whole world got back to business at once and it seemed like there wasn’t enough help to go around. At that time, we heard from dozens of private equity firms that couldn’t book their preferred third-party resource.
We helped those firms by connecting them with industry-specific firms and consultants that understood their business’s most pressing needs.
Every service provider in the Business Builders’ Network has gone through a rigorous vetting process, giving us confidence in every match we make whether it’s a first-time engagement or a repeat relationship.
BluWave founder and CEO Sean Mooney has three tips for organizations when their usual service providers are at full capacity.
1) Use Alternatives
“If you’re go-to is sold out, don’t try to force them into giving you capacity. You’ll get the C team,” Mooney says. “There are plenty of other comparable PE-grade specialists that you should use.”
2) Use Substitutes
“There are other diligence and value creation products that go by a different name but still serve your need,” he adds. “For instance, if you can’t get a commercial due diligence group to meet your deadline, use a voice of the customer group to do a deep dive on your target’s customers.”
3) Use Independent Consultants
“There’s a select world of independents who spun out of name-brand shops and can give you the same product at a fraction of the cost,” Mooney says. “This cohort works well not only for commercial diligence, but also for operational and HR diligence as well as value creation.”
Mooney recognizes that trusting your most important work to new partners can be scary. With the right introduction, though, the risk can have a huge payoff.
“Using new groups can be nerve-racking,” he says, “but the BluWave network of PE-grade resources is on standby to meet your specific needs.”
Whether your go-to service providers are at full capacity, or you just don’t know who to turn to, give our research and operations team a call. They’ll connect you with a shortlist of exact-fit third parties within a single business day, and be by your side until the completion of the project.
How BluWave Enabled Massive Turnaround of Family-Held Business
Service Area: Interim Executives (CFO and COO)
Client Type: Family-Owned Business
Service Provider Type: Specialized Interim Executives
Industry: Industrial Distribution and Services
The Need
Interim CFO, COO Team for Turnaround
A multi-generation family-owned business faced significant challenges due to declining financial performance and market dynamics. The company also suffered a cyberattack that exposed weaknesses in its IT infrastructure. Recognizing the need for help, ownership sought external expertise to guide them through a comprehensive turnaround.
The Challenge
Revitalizing Profitability, Building Value Creation Foundation
The business grappled with challenges related to its profitability and internal capacity. The cyberattack highlighted the urgency of implementing an effective IT infrastructure and strengthening the leadership team. An outside advisory board, hired by the family, immediately recommended that a multifunctional team with interim CFO and COO turnaround skills was crucial. The objective was to streamline operations, reduce costs and create a sustainable foundation for renewed growth in order to rebuild value for the family and company stakeholders. Trusted advisors introduced the family to BluWave.
How BluWave Helped
Proven Executive Duo a Perfect Match
BluWave sprung into action, first taking time to understand the unique situation and the factors needed for success. BluWave then swiftly matched the family business with a highly experienced interim CFO and COO duo from the BluWave Network who understood the complexities of the company’s industrial markets and possessed a background in turnaround and operational performance improvement. Because of the ready-to-go nature of the PE-grade, pre-vetted Business Builders’ Network, BluWave was able to introduce the perfect fit executives to the company’s family ownership within a single business day.
The Result
Accelerated Profitability, High-Valuation Sale
The transformative efforts led by the interim CFO and COO turnaround team resulted in significant improvements in profitability and operational efficiency. The company quickly took action to stabilize and reinvigorate revenue and optimize human capital, which increased EBITDA from approximately breakeven to more than $10 million in less than 18 months. The cultural shift toward performance and accountability empowered the employee base, enabling them to rise to the challenge and drive positive change throughout the organization. The family was then sold the business to a top private equity firm at a nine-figure valuation.
The collaborative partnership between the family, the interim CFO and COO combo and BluWave facilitated a comprehensive turnaround, leading to increased profitability, operational efficiency and a transformed organizational culture. The company continues to thrive under new leadership, supported by the foundation laid during the turnaround engagement. In fact, the current full-time CFO and the former turnaround interim CFO connected by BluWave keep in touch to this day.
There had to be a tremendous amount of change within the leadership team because we were driving a culture of change toward performance and profitability. They were invigorated by the accountability they saw and the opportunity, and they rose to that challenge.
-Turnaround Interim CFO
Streamline Your Business-Building Processes with the BluWave Alpha Center
At BluWave, we understand the challenges that proactive business leaders face in finding and engaging with top-tier service providers. That’s why we’re excited to introduce the BluWave Alpha Center, a cutting-edge portal designed to streamline your third-party sourcing, project management and data insights processes.
This AI-driven platform empowers private equity firms, portfolio companies, and private and public businesses to stay ahead of the curve and be at the forefront of modern value creation.
“We are excited to introduce the BluWave Alpha Center, a game-changing platform that empowers private equity firms to accelerate their business-building efforts,” said Sean Mooney, a former PE deal partner and BluWave’s founder and CEO.
Enhanced Collaboration for Maximum Efficiency
Collaborating effectively across teams is crucial in today’s fast-paced business landscape. With the BluWave Alpha Center, you can ensure that your entire team is on the same page. Our platform provides a centralized hub for insights, intelligence and white-glove service, facilitating seamless teamwork. From tracking evaluation processes to scheduling meetings, the Alpha Center simplifies collaboration, ensuring that everyone is working toward a common goal.
Accelerate Your Project Kickoff
In the private equity industry, time is of the essence. The Alpha Center enables you to kick off searches to get connected with the exact PE-grade third parties you require at the exact time you need them. By accessing your Alpha Center account, you can submit high-level criteria to our Research & Operations team and schedule scoping calls with ease. Our best-in-class third-party resources are just a few clicks away, allowing you to accelerate your project kickoff and make progress at the speed of private equity.
Efficient Project Management Made Easy
Managing projects efficiently is key to achieving success. The Alpha Center provides powerful project management tools that simplify the process and enable you to make informed decisions faster. Evaluate service providers, manage onboarding processes and track progress from initial review to contract signings all within a single platform.
This streamlines your project management, saves time and ensures that your deal processes stay on track, aligning with your key objectives and improving outcomes.
Centralized Data Management for Better Insights
Data management is often a challenge, with valuable information scattered across different platforms. The Alpha Center acts as a comprehensive repository, bringing together all your project insights into one place. Catalog projects undertaken through BluWave, access information on providers and capture feedback on past performance.
This centralized tool ensures that you can easily search and share valuable insights across your organization, reconnect with previously vetted resources and facilitate informed decision-making.
Real-Time Insights and Market Comparisons
Stay informed and benchmark your performance with real-time insights and market comparisons. The Alpha Center provides dynamic quarterly updates and detailed reports on project trends, the Value Creation Index and rising priorities in the industry.
Compare your personalized dashboard with these insights to ensure that you’re aligned with the market and leveraging the full potential of your third-party engagements.
The BluWave Alpha Center is more than just a platform – it’s a game-changer for private equity firms and businesses looking to optimize their business-building processes. With enhanced collaboration, accelerated project kickoff, efficient project management, centralized data management and real-time insights, the Alpha Center empowers you to make informed decisions, drive value and stay ahead of the competition.
“We’ve been working with a group of top PE firm beta users, taking their feedback and updating what will be a continually evolving resource,” BluWave Head of Technology & Insights Houston Slatton says. “We’re excited to support existing clients and welcome new ones to the next generation of BluWave.”
Discover the power of the BluWave Alpha Center by scheduling a demo today and unlock the full potential of your business-building strategies.
Hire Interim CTO: Benefits, Advantages
Why should a private equity firm or a private or public business hire an interim chief technology officer?
In today’s fast-paced digital landscape, technology leadership is crucial for businesses seeking to innovate, streamline operations and stay ahead of the competition. But finding the right CTO can be a challenge, particularly for private equity firms managing a portfolio of companies, or private and public companies undergoing significant change. This is why outside resources that are intimately connected to the top temporary tech executives can give you a huge advantage.
“For companies with tech products – internal or external – a good CTO can provide necessary leadership to make sure those products are built on time, at budget and with high quality,” says Houston Slatton, BluWave’s head of technology. “They can also play a role in architecture, validating the tech stack and helping determine the right path forward in growing organizations.
Interim CTOs can serve as a stopgap solution to either turn things around or simply keep the business moving forward while a long-term solution is sought.
Here are five benefits of hiring a temporary CTO.
ALSO SEE: Data Consolidation: Benefits, Challenges, Process
1. Improving Technology Operations
An interim CTO can provide a quick but comprehensive assessment of your technology operations. They can identify areas for improvement, streamlining processes, upgrading outdated systems and optimizing technology usage to drive operational efficiency and productivity.
Implementing a new IT asset management system, automating manual processes or transitioning to a cloud-based infrastructure could be part of the transformation. These changes not only free up your team for more strategic work but also enhance your disaster recovery capabilities while reducing IT costs.
2. Bringing in Best Practices
Interim CTOs, with their vast experience across various industries and companies, can introduce best practices into your organization. They can guide your team in implementing agile development methodologies, which can shorten your product development cycles and accelerate time to market.
Additionally, they can help establish a robust cybersecurity program to safeguard your data from cyber threats and lay out a comprehensive disaster recovery plan, ensuring business continuity in the event of a disaster.
READ MORE: Platform Modernization: App, Software Upgrade
3. Developing a Technology Roadmap
Interim CTOs can craft a strategic technology roadmap that aligns perfectly with your business goals. They can help you identify key technology trends that could impact your industry in the next 5-10 years and develop a plan to adopt these technologies.
This foresight can provide a competitive edge and enable you to prioritize your technology investments effectively based on your business objectives.
4. Overseeing Technology Projects
Whether it’s a complex digital transformation initiative or a software development project, an interim CTO can provide expert oversight. They can manage the risks associated with these projects, coordinate the efforts of multiple teams and ensure that the project aligns with your business objectives, all while making sure the project is delivered on time and within budget.
READ MORE: How To Extract Data from ERP Systems
5. Providing Strategic Guidance
Strategic guidance from an interim CTO can be invaluable to your executive team. They can help develop a plan to invest in new technologies that will drive business growth, keep you informed about the latest digital trends and advise you on making technology investments that align with your business strategy.
READ MORE: AI Data Analytics: Business Intelligence Tools
Specialized Interim CTOs
There are interim CTOs who specialize in specific technology areas, such as cloud computing, cybersecurity or data analytics. For instance, if you’re considering a cloud migration, an interim CTO with cloud computing experience can assess your needs, develop a migration plan and manage the transition. Or, if cybersecurity is a concern, an interim CTO with cybersecurity expertise can help you assess risks, implement security controls and train your employees on cybersecurity best practices.
The strategic advantage of hiring an interim CTO is evident. They can provide the expertise and guidance needed to enhance technology operations, drive strategic initiatives and position your business for success in the digital age.
Hiring the right interim CTO can be challenging, which is why engaging a third-party expert in the selection process can be a huge advantage. At BluWave, we excel in presenting tailor-made candidates who align perfectly with your specific requirements. Our deep network of pre-vetted interim CTOs, curated through rigorous evaluation, ensures that you get access to the best of the best. Even better, we can deliver these top-tier candidates within a single business day, enabling you to act quickly and confidently.
Contact our research and operations team to set up a scoping call and leverage the strategic advantages of a temporary chief technology officer.
How To Extract Data from ERP Systems
What is ERP (Enterprise Resource Planning)?
Enterprise Resource Planning (ERP) software streamlines business processes by coordinating data flow across an organization. It provides a single source of truth and optimizes operations.
They are used to manage everyday business activities such as finance functions, compliance, risk management, retail, supply chain and HR.
How To Extract Data from ERP Systems
Integrate API Endpoints
One way to extract data from ERP systems is by connecting your database to an API management platform.
From there, you can define and test your API endpoints with an external tool.
Lastly, you will integrate the API endpoints in order to get the data from the ERP system.
Use Extract, Transform and Load (ETL) Tools
Another way is by connecting your ETL tool to your ERP system’s database.
Once connected, you must tell the program what information you want to pull out before converting it into a format other systems can use.
Then you can put all that converted data into a database.
READ MORE: What are the Different Data Warehouse Types?
Get Help with ERP Systems
As you might have gathered from the overview above, managing Enterprise Resource Planning data is no easy task.
That’s why so many PE firms seek help for their portcos in this area. Private and public companies often seek outside support, too.
Here are the primary hurdles we hear about on scoping calls where a client needs help extracting data from their ERP:
- Lack of internal expertise: This is a common challenge when extracting data from enterprise resource planning (ERP) systems. Outsourcing to a third-party service provider offers access to domain experts with the knowledge and skills to efficiently extract data.
- Time constraints: Outsourcing offers a faster turnaround and allows companies to focus on core business functions rather than data extraction, which can be a time-consuming process.
- Complexity: Extracting data can be complex, especially if the data is spread across different modules or systems. Experienced service providers who specialize in data extraction can provide a more efficient solution and ensure that the information is accurate and reliable.
- Cost: Investing in the necessary hardware and software to extract data from an ERP system can be expensive. By outsourcing the project, companies only pay for the services they need.
- Need for specialized tools: Companies may not have access to the necessary specialized tools and software. These same tools will be part of a third-party service provider’s day-to-day toolkit.
- Data accuracy concerns: Extracting data from an ERP system requires a high level of accuracy to ensure that the data is reliable and can be used for reporting or analysis. If you leave this to chance, you may end up making important decisions based on faulty data.
- Need for customized data extraction: Companies may require customized data extraction from their ERP system, which may not be possible with existing in-house resources. Outsourcing to a third-party provider can provide customized solutions that meet the specific needs of the company.
- Compliance and regulatory requirements: The data extraction may be subject to specific regulations or industry standards. Companies may not have the in-house expertise to ensure that the process meets these standards, and can benefit from the provider’s knowledge of industry-specific regulations and standards. This helps minimize the risk of regulatory violations, legal penalties and reputation damage.
- Scalability: As a company grows, the amount of data generated by an ERP system may increase, and the data extraction process can become more unwieldy. There may become a point when companies don’t have the resources to handle the volume of data generated by their ERP system. Third-party providers can offer scalable solutions that can handle larger data volumes and provide ongoing support as the company grows.
If you’re ready to extract data from your ERP system, we’re here to connect you with a niche-specific, expertly vetted service provider.
We know the resource you need for your specific situation before we ever jump on a scoping call, and we’ll introduce you to two or three best-fit solutions in less than one business day.
Contact us now to meet BluWave-grade solutions to your biggest technology challenges.
Healthcare-Focused Finance Consultant for Portco
Service Area: Financial Modeling & Analysis
Client Type: Upper-Middle Market Private Equity Firm
Service Provider Type: Independent Consultant with Financial Expertise
Industry: Healthcare
The Need
Ready to sell one of its portcos, the PE firm was looking for an outside expert to provide pre-sale diligence
The PE firm was ready to sell its diagnostic supplies and equipment manufacturer and was looking for a financial expert to get them across the finish line.
The Challenge
Financial expert to help prepare a portco for sale
The individual would need to help review quality of earnings, perform a market study, validate a financial model, coach management on pitching, and most importantly, be able to close the books and handle data requests.
How we helped
Connected the client witha PE-grade CFO
BluWave provided three experienced resources – all with CFO experience – from its pre-vetted network in less than 24 hours. We were by the firm’s side throughout the vetting calls, and helped them choose a best-fit option.
The Result
Consultant comes on-site and helps the PE firm close the sale in the same calendar year
Months after signing on the independent consultant, who worked on-site throughout the process, another PE firm purchased the portco. The consultant helped the organization with pre-sale diligence, optimized its finance function and ensured a smooth handoff to new ownership.
The buyers commented on the strong foundation and high growth potential of their new asset. The selling PE firm was equally pleased with the process.
We had a great experience with the consultant. My key feedback is that he has a great temperament and worked well with us and management. He has an ability to work independently and delivered solid results.
PE Firm