Bangkok Post

Four Tactics for Creating Value in Private Equity

Most PE firms understand the importance of strong value creation—yet many still lack a clearly defined model.

By Hugh MacArthur, Suvir Varma and Sharad Apte

First published on Σεπτεμβρίου 09, 2016
min read


This article originally appeared on Bangkok Post. The turbulent investment climate of recent years has impressed upon every PE firm how important strong value-creation skills have become for grooming portfolios that can earn top-quartile returns. The challenge is not new, nor are the efforts to address it. Yet, as we report in Bain & Company's Global Private Equity Report 2016, attempts to implant portfolio value-creation capabilities have too often been halting, scattershot and, in some cases, ineffective—and, even as 2016 began, too often nonexistent. A recent Bain survey of operating partners hired to head up portfolio value-creation initiatives found that only half of the respondents said that their firm had developed a clearly defined model for how to proceed. There is no one winning formula for getting this right. Many leading PE firms are beginning to recognise that a solid portfolio value-creation programme needs to flow organically from a firm's unique strategy and values. Bain believes that any properly structured approach should be consistent in the way it acts across companies and address three interlinked issues: the firm's philosophy, or its guiding objectives for value creation; its engagement model, or when, on what issues, how and with what resources it will intervene in its portfolio companies; and its organisation, or what talent it needs (both internal and external) to execute the model and their roles and responsibilities for achieving success. Let's look at four archetypal portfolio value-creation programme approaches that capture these priorities. Read the full article at Bangkok Post. The article was prepared by the authors at Bain & Co as part of its Global Private Equity Report 2016.

This article originally appeared on Bangkok Post.

The turbulent investment climate of recent years has impressed upon every PE firm how important strong value-creation skills have become for grooming portfolios that can earn top-quartile returns. The challenge is not new, nor are the efforts to address it.

Yet, as we report in Bain & Company's Global Private Equity Report 2016, attempts to implant portfolio value-creation capabilities have too often been halting, scattershot and, in some cases, ineffective—and, even as 2016 began, too often nonexistent. A recent Bain survey of operating partners hired to head up portfolio value-creation initiatives found that only half of the respondents said that their firm had developed a clearly defined model for how to proceed.

There is no one winning formula for getting this right. Many leading PE firms are beginning to recognise that a solid portfolio value-creation programme needs to flow organically from a firm's unique strategy and values. Bain believes that any properly structured approach should be consistent in the way it acts across companies and address three interlinked issues: the firm's philosophy, or its guiding objectives for value creation; its engagement model, or when, on what issues, how and with what resources it will intervene in its portfolio companies; and its organisation, or what talent it needs (both internal and external) to execute the model and their roles and responsibilities for achieving success. Let's look at four archetypal portfolio value-creation programme approaches that capture these priorities.

Read the full article at Bangkok Post.

The article was prepared by the authors at Bain & Co as part of its Global Private Equity Report 2016.