MRA recently helped a PE firm on an acquisition through due diligence and post-acquisition strategic advisory. Regrettably this acquisition is not working out well. Simply stated, the PE firm that acquired the Company ignored some of the “softer” issues needed for success. Most notably the PE firm allowed the acquired company’s brand equity to atrophy and it fought the existing company management’s very unique, yet very pronounced cultural norms. Continue reading The Surprising “Most Frequent” Reason for a Failed Acquisition
Tag Archives: Private Equity
The Brave New PE World
The PE industry has evolved since the 1980’s. Back then, the industry used leverage to generate investor returns. In the 1990’s the PE Industry made money by buying companies and expanding them. The 2000’s ushered in a period of earnings growth fueled by strong beta market growth trends. And now, for better or for worse, the industry is being driven by returns PE firms are generating through management of and operational improvements in their portfolio companies. Continue reading The Brave New PE World
Many Ignore Top-Line Issues in the Due Diligence Process
At the October 2013 TMA Annual I spent a morning with a senior due diligence professional from a “Big 4” firm. He told me that his target clients were PE investors and lenders who were seeking better information on the quality of a potential investment company (or new debtor). At one point, I asked the due diligence professional about what role growth and top-line related issues played in most of his reports. His answer: “growth related issues usually are covered in an asterisk”. Continue reading Many Ignore Top-Line Issues in the Due Diligence Process
Generating Alpha Growth in the Middle Market
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 Turnaround Case That Generated “Instant” Top-Line Growth
In this case, a legal services company went into default on its loan. The PE sponsor was forced by the company’s lender to bring in a turnaround firm to serve as a CRO and to provide the bank with clarity on the company’s finances. After the initial financial evaluation it became clear that marketing and sales issues were at the heart of the company’s problems. The turnaround firm on the case was subsequently able to generate significant additional revenues on the project because it possessed its own marketing and sales advisory. Continue reading A Turnaround Case That Generated “Instant” Top-Line Growth
How to Grow in Slow Growth Markets
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
Bad Sign for Turnaround Management Professionals?
WSJ article says that PE firms and Hedge funds are picking up the lending slack to small and middle market companies – while banks are usually open to using professionals, the PE industry is very difficult to pierce. Very interesting data in the article on lending data. http://online.wsj.com/article/SB10001424127887324637504578567383459564510.html?mod=WSJ_hps_LEFTTopStories
Bain and Forbes: Best PE Returns in 2012 will be Driven by Alpha Growth
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
One Way to Generate Incremental Revenue for a Turnaround Management Consultant
Fee generation has been a challenge in the turnaround management industry over the past few years. Yet, as our most recent case demonstrated again, introducing operational sales and marketing consulting services into an engagement can be a consistent source of new revenue for Turnaround Management Firms. Continue reading One Way to Generate Incremental Revenue for a Turnaround Management Consultant
WSJ Had it Right in January-It Has Only Become Worse Since Then
In January 2012, Greg Zuckerman of the Wall Street Journal spoke of the decreasing returns of the PE Industry and the implications of those declines. He spoke about the need for much more intensive portfolio management. However, at the time, he could only use Q3 and Q4 2011 data. Since then, we all know that the activity of the PE industry has fallen off the cliff. The problems have only become more intense and the challenges for portfolio management have only become greater. Continue reading WSJ Had it Right in January-It Has Only Become Worse Since Then