Value-creation in Middle Market Private Equity by John A. Lanier holistically examines the ecosystem relationships between middle market private equity firms and their portfolio companies. Small business is the job creating engine in the US economy, and consequently is a prime target market for private equity investment. Indeed, private equity backs over six of each 100 private sector jobs. Both the small businesses in which private equity firms invest, and the private equity firms making the investments, face inter- and intra-company fiduciary leadership challenges while implementing formulated strategy. The architecture of each private equity firm-portfolio company relationship must be uniquely crafted to capitalize on the projected return on investment that is memorialized in the investment thesis. Given the leveraged capital structure of portfolio companies, the cost of a misstep is problematic. Individual private equity professionals are typically members of multiple investment teams for the firm. Not only may each investment team have its own unique leadership style, but its diverse members have to assimilate styles for each team in which they participate relative to a specific portfolio company. Acquisitions and their subsequent integrations add exponential complexity for both private equity investment and portfolio company leadership teams; indeed, cultural integration ranks among the most chronic acquisition obstacles. Accordingly, the stakeholders of private equity transactions do well to embrace leadership best practices in applying value-creation toolbox best practices. The perspectives of both the private equity investment team and the portfolio company leadership team are within the scope of these chapters.
Table of Contents
Primary diligence issues: the trifecta of oversight. The private equity 'operating partner'. The DNA of packs. The importance of strategy. Innovation and value-creation. Marketing versus selling. Leadership choices and organizational design. Change-management competencies: a competitive ace. The legacy effect. Wrapping it up.
’John has taken stock of the lessons learned in his many years of real world experience and distilled them into a useful and pragmatic synthesis in this book. It is refreshing to see the attention paid to many topics often overlooked and underappreciated as value levers in investing.’ Ric Andersen, Milestone Partners, USA ’When I first met John, I suggested that we were separated at birth. In working with John several times thereafter, I realized he is the smarter twin. This book needs to be open on every PE firm’s deal team desks. IT diligence, hiring the right people, viewpoint gaps between the firm’s financial and operating members... I could go on and on. Read this book. It will change how you create value.’ Lloyd Rogers, Riverside Partners, USA ’Building best-in-class companies in the middle market, while creating greater shareholder value, is both challenging and rewarding. This book contains many of the principles that Excellere Partners embraces in its own value-creation partnership model, and for good reason. We worked with John Lanier for a dozen years - seven as his client before asking him to become our partner. Creating value requires a tremendous amount of strategic thinking, coupled with a disciplined process to execute strategic initiatives - this is done to strengthen the company’s foundation that will support significant future growth. This book is a gift for framing a value-creation model to both private equity firms and the companies in which they invest.’ Robert A. Martin, Excellere Partners, USA