Robert (Bob) Gold’s Post

In a slower deal environment, private equity firms are looking to boost value creation. How? As McKinsey reveals, one strategy gaining traction involves a renewed focus on enhancing operational efficiency. By improving operations, private equity firms can find value in their portfolios, even in tough markets. This approach acknowledges that traditional methods may not suffice in the current landscape and underscores the importance of adaptability and agility in driving sustainable growth. #PrivateEquity #ValueCreation #OperationalEfficiency

An uncharacteristically readable piece from McKinsey & Company.   The central themes of 1) prioritising operational value creation from the outset and 2) ensuring alignment with value creation objectives will enable financial sponsors that prioritise operational efficiencies to outperform are absolutely correct. With hold periods extending, sponsors' execution of the plan needs to be increasingly clear when it comes to exit. Easier said than done, of course…

PE - "Invest with operational value creation at the forefront" ( McKinsey & Company ) - invest with operational value creation at the forefront - bring best-of-breed capabilities to portfolio companies - everyone should understand and have a hand in improving operations - shift from “buy and hold” to “acquire, align on strategy, and improve operating performance” --------- #business #portfolio #pe #privateequity #valuecreation

If you’ve been reading my posts for awhile you’ve seen the woe that the private equity world has been in. How can private equity create value in these challenging times? It’s all about operations. Good piece by McKinsey on how to get there. #privateequity #operations

Cost-cutting or growth? Why not both? Bain & Company's M&A Midyear Report 2024 highlights a shift in strategy as companies navigate ongoing challenges like high interest rates, inflation, and regulatory pressures. The focus is no longer just on cost-cutting or growth, dealmakers are actively pursuing both. This evolving approach reflects the adaptability of companies as they strive to create value in a complex macroeconomic environment. #M&A #Business #Strategy

📈 Research shows: operational efficiency = higher returns! ⬆️ McKinsey & Company research indicates that private equity buyout managers focusing on operational efficiency achieve up to 2-3% higher internal rate of return compared to their peers. At the same time, adaptation is the name of the game in today’s evolving investment landscape. With shifts in interest rates and market dynamics, operational value creation is taking center stage. 🚀 #privateequity #operationalefficiency #investing #privatemarkets

Times have changed, we all know it. Financial value creation through declining interest rates and escalating asset prices, the post powerful levers for PE investors over the past 40 years, has gone. Now it's about operational value creation. But it's not about one-time or business-as-usual operational efficiency improvement efforts. It's about investing with operational value creation at the forefront, before signing, not only to understand where to create value during the holding period and beyond, but also to build a robust execution plan and align all stakeholders including management. It's about deep transformation and shared accountability. It's about people, capabilities and governance. Our latest research shows a significantly higher IRR potential for best performers. Have a look and let's talk about it! #PrivateEquity #ValueCreation #McKinsey #Transformatop,

This is an excellent “must do” #checklist from pre and post closing hitting the #strategic, #financial, and #operational value drivers all throughout the life stages of the investees. #valuecreationplan #buyout

In-depth article from McKinsey. Again, another consulting firm focusing on the value of operational improvements and associating that work with top-line revenue and organic growth. Big leap. But still, good article. https://lnkd.in/g8EcCv9q

In the current inflationary market, PE’s value creation model must embed Operating Performance. Once a nice-to-have, this is now essential for achieving expected returns. Specially for smaller and mid-market companies, the Operating Partner has become an essential ingredient in unlocking value creation, moving from backseat to frontseat. The Operating Partner is crucial to drive bespoke margin expansion strategies to offset compressed multiples and potential valuation mismatches. Bridging private equity’s value creation gap - Private Equity & Principal Investors Practice - McKinsey & Company