What challenge(s) do our clients face?
To deliver sustainable and healthy returns PE firms must become successful operating partners for their portfolio companies
High entry multiples and competition for assets is putting pressure on private equity companies to continue to deliver top quartile returns. Firms can no longer rely purely on financial engineering to enhance portfolio value and instead must become more innovative through operational improvements.
The greatest challenge that PE managers face today, therefore, is to become successful operating partners for their portfolio companies, actively supporting them to deliver significant and sustainable value and deliver the expected returns. It is not enough anymore to only bring-in an experienced management team and rely on senior experts on the board.
True operating partners must be engaged across the entire life-cycle of the deal, guaranteeing that the due diligence clearly identifies the main drivers of value-creation, collaborating with management teams to guide the business through the growth cycle, and truly understanding and focusing on the human element of the business. The working culture of a company, with an engaged, enthusiastic and incentivized team in the right organizational design is critical to success.
How do we help?
Integration has supported several private equity managers in this challenge of becoming a better operating partner. Our functional expertise, coupled with our hands-on, collaborative and pragmatic approach enables us to help these clients with different investment theses and throughout the investment cycle.
We have worked with clients in different categories, geographies and positions along the value chain:
In this video, a range of clients from the Private Equity sector talk about their positive experience working with Integration.
Integration was asked to help a private equity client with the carve-out of an international fast food delivery franchiser, ensuring that it could operate as a stand-alone entity immediately after the separation.
Our client requested our support with every element of the carve-out from: analyzing and mapping key-processes, positions and professionals through to preparing tailor-made communications (internal and external) which would guarantee readiness and calm for staff and minimize market movements.
To guarantee the smooth transition period Integration undertook a variety of activities such as:
- We interviewed 40+ professionals and documented the main elements for business continuity, including organizational structure, key processes, positions and professionals.
- We evaluated and created different scenarios for “taking control”, depending on the uncertainty of closing procedures, guaranteeing adherence to reality and flexibility of the team to react quickly and precisely within project definitions
- We guaranteed knowledge transfer to the new leadership and supported them in this initial period, by bringing visibility of daily business and project activities.
- We designed and implemented change management activities to welcome new professionals. Strong communication efforts were used to motivate individuals, teams and the whole stand-alone company.
- We completed a map of key positions and hires alongside a detailed recruitment plan for the HR area.
The office move and relocation was completed in less than one week with no delays.
The company was prepared for its stand-alone operation after closing and the leaders took ownership of their roles and implemented the governance from Day One. Our hypercare support for leadership guaranteed that all issues were addressed in an efficient way without impacting the daily business.
Efficient internal and external communications almost ensured that there was no impact on franchisees, guaranteeing alignment and motivation for the internal team.
Integration was hired by a private equity manager to carry out a scan of the plastic pipes (PVC and HDPE) market in Mexico.
The client had an investment thesis on a top player within the industry and wanted to validate market numbers (size, growth forecast and drivers, segmentation, market shares, channel and product margins etc.) and hear Integration’s point of view about market attractiveness and growth paths for the company they were evaluating.
We developed both a top-down and bottom-up market sizing broken down into product, sectors, regions and exports; understanding market forecast by product and end user industry, competitive landscape competitors manufacturing and logistics footprint and growth avenues, detailing the expected growth for the client’s target company from its core business expansion, as well as for new products/markets.
The project confirmed the PE’s investment thesis and provided very valuable information to design the growth avenue strategy, financing strategy and the 100-day post acquisition plan.
We were invited to present the project to the first investors round tables adding confidence in the market evolution determination.
A leading toy retailer acquired its biggest competitor, creating a joint network of more than 170 stores.
This acquisition came shortly after the retailer’s sale to a private equity fund.
The challenge was to go through the implementation process and the significant changes that it brought whilst maintaining business activities and value. Specifically, Integration provided support to:
- Integrate the new senior management team
- Define the organizational redesign of the company
- Retain talent among professionals
- Ensure employees of both companies were working together
- Structure and conduct communication and training programs whilst managing stakeholders throughout the process
Integration supported in 4 main aspects:
- Definition of the integration strategy for each area, ensuring clarity for each leader and their team.
- Fostering active participation among company leaders with PMO support to make their decision-making process more efficient for a successful DAY ONE Implementation.
- Communication and constant alignment with the project team and the executive committee whilst organizing DAY ONE.
- Implementation of change management strategies to integrate professionals into one single office for working efficiently together from DAY ONE.
- Professionals from both companies worked together in the same office for the first time with great results.
- The planning and execution of DAY ONE happened successfully.
- There was efficient internal communication, strong engagement and high awareness of the milestones taking place between the two companies.
- Changes in the organizational structure were implemented with respect and no issues.
- The new senior management team were integrated effectively.
A private equity firm made a significant investment to consolidate the education sector in Brazil, building one of the largest education companies in the world with more than 1.5 million undergraduate students. The company was searching for new ways to relate to its student base and reduce the cost and complexity of operating a model based on physical presence.
Integration understood the student journey, segmented the different services models and considered opportunities for centralization and automatization through the use of new technologies such as BOT´s, online tools, artificial intelligence and predictive analysis.
The project was recognized for delivering an increase in service level, high engagement from the different areas of the company and has driven more than U$20 MM in savings.
An asset management firm grew rapidly through third party investment and the acquisition of new credit portfolios, which differed from their base business. As the organization entered a moment of transition in terms of management model and business characteristics, it needed to ensure greater control of the operation, which had typically run on undocumented, implicit knowledge. The goal was to prepare the business for growth in a sustainable way.
We carried out a diagnosis of the 11 areas and 96 processes of the organization and identified 16 priority processes in core areas. We worked with a multifunctional team inside the client to redesign priority processes through a series of workshops, simultaneously mapping out the key factors required to implement them. Once the processes were finalized, we prepared a full roadmap of activities to implement and solidify the new way of working, involving professionals across the organizational pyramid.
With the implementation of the priority processes, the company gained productivity particularly through the front office areas, which allowed them to grow 2,5 times in AUM in 3 years without an increase in hiring.