- Eric Norden
Adaptability – A Key Requirement for Leaders, Owners and PE Investors
Updated: Feb 22
Remaining nimble will be a strategic advantage in the months ahead
What are we seeing in the markets?
2022 was a choppy year for many private equity companies and investors given the numerous market challenges. As we have seen, the appetite and willingness to invest through PE groups may have slowed, but a real underlying momentum continues. With over $1 trillion in “dry powder” (available capital) and continued successful fund raising, PE efforts will continue but will have to adapt in order to deploy capital and ensure investors see the appropriate levels of returns (2023 Outlook, Cambridge Associates).
With available capital and investors still willing to deploy additional dollars, even amidst market challenges, something still needs to change. As noted by Bloomberg Law in a recent article, “adaptable playbooks” will be necessary as things move forward. Private Equity groups have been proven to be adaptive – and that will be more important than ever for the IT function within their holdings.
Remaining Flexible and Adaptable
As we’ve noted in previous articles, being flexible and adaptive in moving forward will be key in 2023 (and beyond) for the IT function. Though easy to say, it can be hard to execute. As markets evolve and challenges are better understood, ensuring you have the right resources (both internal and external partners) to move forward will be essential.
Establishing new partnerships
Finding partners who can adapt to your needs or can simply fulfill your group’s needs can be more cost effective and have better results given the deeper levels of skills. Experienced groups like ours can provide valuable resources across industries that also have deep experience with the full lifecycle of Private Equity.
Relying on specialists for shorter-term needs
Many smaller mid-size PE groups have limited internal resource or resources that don’t have the needed or depth of experience within a specific vertical industry. Being able to quickly find and leverage resource with a deep specific experience base will be key. Companies like ours can provide those much needed competencies and can be leveraged on a time-line that makes sense for your organization.
Leveraging partners for leadership of strategic initiatives
Depending on the size and make-up of your company (or investment firm), a trusted partner can assist in all phases of the PE life-cycle. In many instances, they can provide the dedicated focus to sustain momentum that might otherwise lag due to a lack of capacity or qualifications.
Due Diligence - This phase can be some of the most intense effort groups may face. Time is often limited, and pressure is intense. Availability of resource and documentation may be extremely limited. Experienced operators have been through these concentrated periods and have the background and models that can be leveraged to create an accurate picture of the IT and Operations current state.
Post-Acquisition – The early days of an acquisition can be exciting and nerve-wracking. Getting a plan in place for IT that is harmonized with the overall plan is imperative. Often IT leadership is absent or needs to be reinforced. Having the capability of deploying resource like ours can ensure stability and a successful execution of the short term plans.
Interim Operators – Depending on the intent (short- versus long-term hold), utilizing an interim or short-term IT leader can have its advantages and provide a potential buyer needed flexibility for long-term decisions.
Exits – Preparing for any style of exit can have its challenges. The ability to highlight a well-developed, well-run IT function can be valuable and add to the top line. Cybersecurity – in particular – is always deeply scrutinized. Having a comprehensive security approach and supporting processes that are woven in the fabric of IT can quicken the pace of due diligence or a purchase / sale transaction and mitigate overall risk for a deal.
How Can We Help?
If you don’t have an objective baseline for your current state, if you lack a plan for how to improve, or if you’re simply in need of a coach to help you along – we can help.
Deep experience supporting PE groups, owners and investors with transactions:
Due Diligence and Investment Thesis development
Program management to quickly put in place stabilization and improvement plays (F100 execution, integration & alignment, turnarounds)
Operational acumen. We provide experienced operators and have the requisite experience to lead or develop and transition to new IT leadership.
Preparation for exits or sale. Understanding how buyers value and assess IT assets (and risk) and assisting in maximizing returns.
Rapidly assessing your current state to identify organic improvement opportunities, risks to be mitigated within the environment, and prioritizing initiatives to streamline your operations and fully align technology with business operations
Planning improvement initiatives, providing missing resources to achieve your objectives, and managing these efforts to meet proposed milestones
Evaluating your current IT spend and finding savings or increased value for your dollars expended – increasing your confidence you are investing in the right areas
Assessing your IT and Operations teams, vendors and delivery capability against competitors and benchmarks, and developing a strategy to address deficiencies
Providing dedicated leadership for key strategic projects to maintain momentum and complete efforts on time and within budget
Implementing appropriate leadership for your IT organization – including recruitment, onboarding, transition support and ongoing coaching for key positions
ANALYSIS: Private Equity Can Slow Down, But It Can’t Stop – Bloomberg Law
Private equity outlook in the face of macroeconomic headwinds – Wolters Kluwer
2023 Outlook: Private Investments – Cambridge Associates