Every day there seems to be a new article in the PE industry press about the importance of PE firms generating growth from their portfolio companies. Many of the articles conclude that in today’s brave, new PE world, that generating portfolio company growth is now more important to a PE firms’ overall investor returns than are a firms’ proprietary deal flow or its financial management/expertise.
This short article on PE Industry growth begins by commending the ACG on the webinar it sponsored today: “Advanced Customer Due Diligence – 5 Tools to Improve Integration & Accelerate Growth.” The informative, well produced and moderated webinar focused on a growth related platform for PE firms that was developed by Walker Information, Inc. (http://www.walkerinfo.com/) and executed by Driehars PE (http://www.driehauspe.com/).
Walker’s approach seems to be onto something. It is a PE growth platform that is straight forward, proven effective, measurable and affordable. To get the best results from their platform, PE firms use it to pre-plan for growth at a target company during the due diligence process. The specifics of how they help PE firms and their target companies to segment and then plan for growth at the target company’s customers is intriguing and well worth a review. I wanted to hear a bit more about the challenges of implementation, but the PE executive from Driehars PE gave his testimony as to how well it worked for them.
The Walker approach and Walker’s historic positive results for PE firms are all the more impressive in light of today’s slow growth markets. In slow growth markets, PE firms that need growth from their portfolio companies (i.e. all PE firms) need a pro-active organic growth planning process and Walker seems to have it.
Like Walker, MRA has also been blogging about its growth planning process and results for PE firms. The MRA process is also best used at the time of due diligence work and like Walker, MRA’s process is straight forward, proven, measurable and affordable. While Walker is far more detailed and precise on customer related segmentation and planning, MRA’s process is much more encompassing of broader target company sales and marketing issues and plans. For more information, see http://michaelrothadvisors.com/brave-new-pe-world/#more-477.
Both platforms can be the difference in a PE firm succeeding in generating immediate target investment growth and overall PE firm investor returns.
April 23, 2014
It is reaffirmed in 2013 that specific alpha growth planning is necessary for most middle market companies and their PE sponsors. After 2 years of contraction (2008-2010), markets have rebounded, but with only tepid growth. Moreover, the IMF and others just revised downward again – even before DC’s latest shenanigans – growth projections for at least 2 more years. Continue reading Generating Alpha Growth in the Middle Market
A recent E&Y report was especially sobering. It concluded that after 2-3 years of “recovery” it will be more difficult for companies to generate growth in the months and years to come. In E&Y’s words:
“Our research ….. suggests there is not going to be an early return to the business conditions that drove growth in the past decade. The economic forecast for the coming years is for a slow recovery and some slowdown even in the faster growing emerging markets, as demand in developed markets remains weak. To grow and succeed in such an environment will require that companies intensify their competitive efforts…Most growth will have to be won from competitors.” Continue reading E&Y, WSJ & CFO Agree: Slower Growth is The New Normal
One of the largest consumer products companies in the world (at the time +$8 billion in sales) was seeking growth from a division with several brands that were more than 50 years old and had long ago peaked in sales and market share. The Company was Warner Lambert/Pfizer, the brands included Halls, Trident, Dentyne and Rolaids. Continue reading Generating a Positive Turnaround at a Healthy Company
A consumer company with sizeable regional market shares had suffered financial losses from poor plant operations and ineffective marketing strategies and implementation. The Company filed Chapter 11 and a turnaround management firm was brought in by the lending group and the 2nd lien holding hedge fund. The Turnaround Management Firm’s scope was to do an assessment and to development a plan to help the company exit from bankruptcy. Continue reading Turnaround Case Study – A Hedge Fund Wins Control of a “Crown Jewel”
Today the IMF is likely to lower its forecast for US economic growth in 2013. This is in large part due to the stupidity of the US government using austerity budgeting when growth and job creation should be the priorities. (Austerity budgeting is even more stupid when the European results of austerity budgets are so clearly negative). Continue reading How to Grow in Slow Growth Markets
In a series of articles in Forbes, contributors from Bain & Company dissected the current state of the PE market and discussed the outlook for investor returns in 2012 and beyond. The good news was that PE Industry returns will still likely out-pace most other comparable investments. The bad news was that returns will likely be at their lowest since at least 2009. All things remaining equal, the Bain contributors concluded that those PE firms that can drive organic growth from their portfolios would be those that would excel in the industry. Continue reading Bain and Forbes: Best PE Returns in 2012 will be Driven by Alpha Growth
The client in this case was requested by its lender to work with a Turnaround Management consultant because it had tripped a covenant on its loan and had lost the confidence of that lender. While this is a classic turnaround situation, this client had lost its way due in large part to marketing, sales and top-line issues. Continue reading The Win-Win-Win-Win Turnaround – Winner Number 1 – The Client
For years, E&Y has been surveying corporations around the world on many subjects including a recent thread on what it takes to grow a company in today’s markets. This year’s report was especially sobering in a couple of ways. One such sobering thought was that after 2-3 years of “recovery” one would think that growth on a company level would be getting easier. However, the E&Y survey confirmed that growth for most companies it is actually getting more difficult to achieve. Continue reading Ernst & Young on Growth – If a Company Needs Growth It Needs a Plan
Global M&A activity results continue to indicate very weak deal making activity especially in North America and Europe. Continue reading Merrill Corporation Releases June 2012 Report on M&A Activity