Helping investors make deal decisions

Preface

BSG Growth professionals have worked alongside investors across fund types to develop and detail the right investment thesis, identify and profile specific industry sectors, help investors select assets and make deal decisions, and prepare post-acquisition value creation plans.

In the following case, the Firm had several business lines that managed debt, real estate, hedge funds and a small growth equity fund. The Firm chose to “start-up” a private equity fund. The fund would be designed to target middle market companies, preferably in non-cyclical industries.

In establishing the fund strategy, Firm management expressed the need to understand best practices of other middle market funds that had achieved a sustained level of top quartile performance. These best practice learnings helped to sharpen the focus of the fund strategy and design of an organization and business system to execute a buy and build strategy.

The story

We were engaged by a new fund sponsor to developed detailed strategies for a buyout fund investing in middle market industrial and business services companies. The strategies offered more detail on the design of the fund, investment themes for specific sub-sectors and actionable platform targets.  

A key element of the strategy, derived from one of the best practices of top performing funds, was design of an active management approach to execute buy and build strategy.

The private capital firm subsequently acquired several platform companies following the business system that we developed with them and then successfully delivered operating resources and capabilities to the portfolio companies.

The operating resources provided business improvements to strengthen the foundations of the portfolio companies and prepare them for targeted add-on acquisitions. 

Toolkit application

Frameworks for Fund Design

In executing our mandate, we used our operating resources toolkit to develop insights and create a comprehensive investment approach that aligned with the investor’s and general partners’ interests and core values.

• Start with a core buy-and-build approach to adding value. Firm would provide operating resources (where we would assist) to improve the Portco’s capabilities and then target add-on acquisitions that align with the Portco’s growth strategy.

• The firm would develop its investment theses based on disciplined analysis of markets and prioritize targets that would serve well as core platforms in each industry.

Toolkit Application

Implementation of Value Creation Plan

A key business practice and growing trend is to provide operating professionals alongside the firm’s investment professionals as an integral part of the Firm’s overall approach to value creation and active management. In this situation, we worked with Firm management on the design and plan for implementing a business system and organization to make better investment/deal decisions and to help deliver meaningful and sustainable operational change within their portfolio companies.