Staying Competitive in Tough P.E. Market

This is the fourth blog in the series “Staying Competitive in a Tough Private Equity Market.” The first post in the series provided recommendations of essential elements that private equity firms should implement to stay competitive. This blog will focus on the recommendation: Improve the business.

The due diligence process should have uncovered the potential opportunities for improvement. Refer to our blog post: Building a strong due diligence process.

The importance of uncovering these opportunities is that if improved upon, the business can reap bottom-line impact in a very short timeframe. Key performance indicators such as cash flow, EBITDA, profitability, sales, and administrative expenses can be significantly improved.

Focus on the following three aspects of the business to have the most significant impact on performance: People, process, and culture.

People – Businesses are successful because of the people behind them. Make sure you have the right people in the right seats on the bus. More specifically ensure you have a strong leadership team. The leaders within the organization must display certain behaviors in order to lead effectively. Here is a blog discussing leadership principles we recommend.

Process – Most organizations, no matter whether product or service have a significant amount of inefficiencies or wasted time in their processes. Look at the illustration below:

Would you believe that as much as 95% of the time an order is in process is spent on non-valued activities? That means that there is an enormous amount of opportunity to reduce that time.

Culture – Each organization needs to develop their culture identity. This identity should be based on the business’s purpose, the values they adhere to, and the pillars that have made the business successful.

The aspects we explained above are where we focus our approach on transforming a business. Next week, we will publish the final blog of the series: Partner with the Leadership Team.

If you have a sense of urgency to improve the performance of portfolio companies, schedule a call to discuss how we can help.

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4 Ways to Stay Competitive in a Tough Private Equity Market

Jan 15, 2020

Since 2010, the U.S. market has experienced an unprecedented bull market. All this economic well being has led to significant investment activity, and with it, an increased number of investment portfolios. The global cash reserves for private equity…

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