Thomas Cornwall’s Post

Competition for top #talent among #PrivateEquity firms is motivating leaders to think outside the compensation box. PwC's new playbook for driving digital #transformation within portfolio companies explains why PE must adapt to thrive: https://pwc.to/3VrKik8

⭐ The Changing Face of Private Equity Leadership In the realm of private equity, human capital strategies have been secondary to financial maneuvers. In a high-interest, high-inflation landscape, some of these financial maneuvers can no longer achieve the value-creation objectives set by the funds. The evolving landscape calls for a radical shift in perspective, placing human capital at the forefront.   Here are four key reasons why Portfolio leadership has become an integral part of PE success: 📊 Shifting Dynamics: With around $2 trillion in uninvested assets and a decline in appealing targets, the pricing pressure is rising. This shift weakens the advantage of financial engineering and necessitates a focus on operational excellence. 📅 Longer Holdings, Greater Demands: Holding on to companies for longer periods means sustained value delivery through operational excellence, demanding exceptional leadership skills and robust management capabilities, particularly in consolidating smaller entities. 🔎 Changing Investment Patterns: More acquisitions involve stitching together smaller companies into larger entities, demanding superior leadership and management skills, a challenge exacerbated by the relative lack of management bench strength in these smaller enterprises. 🌐 Focus on Value Creation: Recognizing the evolving landscape, private equity firms increasingly acknowledge that leadership effectiveness is pivotal for outperforming competitors and increasing EBITDA, shifting focus from purely financial engineering to value creation through effective leadership. Studies indicate a shift in value creation sources, with operational prowess taking precedence over financial engineering. However, despite this acknowledgment, addressing the leadership void remains a challenge. Stay tuned for part 2, where I'll dive into potential pathways to tackle these issues head-on. #PrivateEquityLeadership #ValueCreation #OperationalExcellence #WeAreEastward

🎯 Unlocking Tomorrow's Value Today: The Premium in Private Equity Investments Ever wondered why private equity firms are willing to pay a premium for companies? 💼🔍 Here's the scoop: 🔑 Securing Future Potential: Premium investments ensure a stake in companies with untapped growth potential. It's like buying a ticket to tomorrow's success story. 🚀 Turbocharged Growth: Firms bring more than just capital; they provide strategic insights, operational expertise, and a growth-focused mindset. Paying a premium gets them a front-row seat in steering that growth. 💡 Risk-Adjusted Strategy: Premiums reflect a deep assessment of a company's worth. By paying more, firms align their investments with long-term prospects, reducing risks while aiming for substantial returns. In a nutshell, paying a premium isn't just about the price tag – it's an investment in future success. 🌟📈 #PrivateEquity #PremiumInvestments

Private Equity News emphasizes a new trend in PE: prioritizing talent in investment decisions. This strategic shift acknowledges that human capital is as crucial as financial metrics in assessing a company's potential. The article explores how PE firms are integrating talent evaluation into their investment process. Join us in discussing the impact of this trend on the future of private equity investments. Read more here: https://lnkd.in/d63FsjAs

What is the future of private equity in 2024? 🤔 . . . With interest rates still elevated through 2024, PE firms will focus on operational improvements to drive value creation, with a focus on talent. The Harvard Business Review ran an article recently that did a good job of summarizing the opportunities and challenges intrinsic to talent in private equity portfolio. On one hand, private equity firms are often in a stronger position to install the right talent at all levels than public counterparts, creating the conditions for building strong teams during the hold period. On the other, the swift changes in leadership that often accompany more complex deals that involve carve-outs or other restructurings can lead to disruptions that demotivate employees if not implemented properly. ➡ The takeaway: While there is no one-size-fits-all method for building a strong talent program, there are a couple of approaches that can serve as a starting point. 💎 The first is to develop a talent transformation function at the firm level – this can be a point person for talent or a broader center of excellence within the firm – that considers opportunities for attracting and retaining talent in every investment the firm makes. 💎 The second is to implement best-practice survey approaches, such as employee net promoter scores and quarterly pulse surveys, that provide visibility into employee sentiment and allow executive teams and Board members to address issues in real time. These are just a couple of the means by which private equity firms can leverage talent to support value creation efforts. 💲💲💲 #privateequity #valuecreation #talentprogram #peopledriverevenue

Bain & Company's 2024 Global Private Equity Report signals unprecedented competition for capital. The supply/demand mismatch is the worst in over a decade. So, how can middle market private equity firms rise above the noise? The answer lies in a robust, forward-looking set of differentiators centered around operational capabilities, responsible investment practices and the ability to drive substantial value creation. Operational acumen is non-negotiable. Firms, particularly middle market firms, need to communicate a track record of not just identifying but leading on revenue growth and digital transformation. It’s about proving that you can roll up your sleeves and enhance the value of a portfolio company from the inside out. Limited Partners and Portfolio Execs being courted by PE: In your due diligence, give weight to firms that exhibit not just historical investment returns but also a clear and compelling strategy for future operationally-focused value creation. #pe #privateequity #limitedpartners #valuecreation #operatingpartners

An insightful article on a Bain & Company report highlighting the state of the PE market, and a historical review of 2023 as it relates to the asset class. Enjoy. #privateequity

In the last two years, private equity firms have shifted their focus to value creation due to slowed exit activity and limited financial leverage. This trend has put technology at the forefront of investment strategies. It's great to see this highlighted in the new McKinsey & Company paper, which explores bridging private equity's value creation gap. Check out the paper here: https://lnkd.in/dBiFBf6W #PEs #valuecreation #privateequity #technology #McKinsey

🚀 What Are the Biggest U.S. PE Firms? ✅ The U.S. dominates the private equity industry globally, and private equity firms control more than $6 trillion in assets in the U.S. ✅ The following list ranks the top ten U.S.-based private equity firms based on assets under management as of the end of the first quarter of 2023. Blackstone ➡️ $1.0 trillion Apollo Global Management, Inc. ➡️ $598 billion KKR ➡️ $510 billion The Carlyle Group ➡️ $381 billion Bain Capital ➡️ $165 billion TPG ➡️ $137 billion Thoma Bravo ➡️ $127 billion Silver Lake ➡️ $98 billion Vista Equity Partners ➡️ $96 billion Insight Partners ➡️ $90 billion

How can Private Equity companies balance returns and responsibility? As private equity (PE) firms strive for operational excellence, there is growing focus on the ethical considerations involved with managing portfolio companies. In industries such as healthcare, some PE-backed companies have come under scrutiny over reduced staff and declining patient care, and sparked debate on the wider implications of such investments. David Bell and Pieter Ebeling examine how leaders must strike a delicate balance between financial gains and social responsibility. #PrivateEquity #EthicalLeadership #ExecutiveSearch Read more here: https://lnkd.in/eNKP93JC