Here’s a follow-up to my yesterday’s-post. PE funds don’t want to sell their holdings at a discount, but their investors need the promised cash.
Questions:
1. PEs own a number of distribution roll-ups. Will they hang on to them longer and shift from financial/legal engineering to innovating service-value - one target customer segment at a time?
2. Do you know of any distributor roll-ups owned by “zombie (PE) funds”?
3. If so, will the PE overlords figure out how to use – customer, SKU and unit-economics – profitability analytics for customer-segment-focused strategies? Done well this improves wealth for all 4 main stakeholder groups: employees, customers, suppliers AND shareholders.
4. Or, will they (continue) to try to squeeze – supplier, employee and customer – stakeholders to enrich shareholders?
a. Within distribution, this doesn’t work for long (especially in economic downturns) before best quality stakeholders defect.
b. And, independent distributors will target the roll-ups’ key employees and customers.
5. Remember the PE-owned, distributor wipe-outs back in '07-'08 with the Great Recession? Could this type of scenario happen again?
Executive Board Chair at Jack Henry & Associates, Inc.
1moGreat interview and explanation by Gary C. Bhojwani of the CNO mission and why it matters!