Portfolio Value Creation
Immediately post-acquisition, we support the drive for rapid returns by developing a strategic blueprint, leading workshops that align management with strategic priorities and directing focused initiatives. During the ownership phase, we support leveraged efforts in revenue enhancement and cost reduction and refresh the value-creation plan.
What we do
Having paid record-high prices for recent acquisitions and with exit conditions likely to be less favorable than those at entry, private equity firms need a radically different formula to earn attractive returns. They are replacing passive stewardship with a hands-on approach to building value in their portfolio companies.
Bain is a leader in supporting an activist approach to ownership. We often find that the work we do immediately post-close has the biggest impact, and our numbers tell the story: The mean return of all investments during the first year where Bain has been retained is 3.3 times invested capital, well over the industry average of 1.8 times. We assist in post-close activity in three time-tested ways:
- Blueprint: Create a value creation plan that defines the full potential of the business and creates a program to capture it—complete with specific initiatives, detailed action plans, assignment of accountability for results and a dashboard of metrics to track operational and financial performance;
- Focused initiatives: Identify highest priorities first, such as new product introductions, salesforce productivity and integration of add-on acquisitions; and
- Management workshops: Provide a structured, interactive forum for sponsors and managers to develop a value-creation plan.
How we work
Bain draws on a full range of industry and functional expertise acquired over more than 30 years as advisers to large and small companies around the world. We bring those capabilities to bear helping activist owners and their portfolio company management teams conduct a rigorous assessment of where their business has the best opportunities to increase its value. This effort identifies the most promising near-term initiatives and longer-term strategic opportunities, establishes time lines with milestones and calibrates the resources needed to meet them.
Throughout, it is our objective to help owner-activists accomplish one overarching goal: To help strong management teams increase the company's value under their ownership more than they could have achieved if bought by the next highest bidder.
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