Strategic commentary

PE firms: How to effectively execute your strategy while ensuring your portfolio executes theirs

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With investor value firmly in mind, the core challenge for private equity firms is to manage multiple company portfolios, but this can all too quickly become convoluted and cumbersome. It’s time for the $621 billion industry to consider digitising Strategy and Execution.

Written by: Thomas Hagerman, Senior Account Executive

The core purpose of private equity firms is to deliver the greatest value for their investors, provided through clear strategy, and methods such as growth plans and process improvements. However, achieving the performance levels necessary for success can be challenging, even more so in the absence of future-proof Strategy Execution tools.

The value of private equity firms

“In 2018, $621 billion was raised for private equity funds, surpassing the longstanding fundraising record of 2008, when $557 billion, was raised across all PE strategies and regions”. Forbes

The PE industry clearly holds tremendous value, but traditional Strategy Execution tools stand in the way of the greatest return in investment.

Why quality Strategy Execution should matter to PE firms

The difficulties of managing strategy from vision through to operational reality are compounded for PE firms executing their own strategy while also supporting and managing the execution of strategy across countless portfolio companies.

On top of that, there is the conundrum of how to effectively analyse and report on the performance of the portfolio in a consistent manner.

For example, should a portfolio which has shown impressive growth begin a dramatic descent in performance levels, information must be readily available for course correction. Continued use of traditional, static tools such as PowerPoint and Excel firmly place the success of these portfolios in jeopardy.

PE firms need to be able to take an accurate view of data at any point in time which tells them how their portfolio is performing and where they need to improve. The real question is whether this reflects reality.

To see how we’re supporting the industry to date, click here to see the story of FSN Capital.

Why your PE firm should adopt a Strategy Execution platform

A Strategy Execution platform, such as that provided by i-nexus, can remedy the shortcomings of traditional tools.

Importantly, they give global c-suite teams and senior strategy leaders of PE firms the technology to transform continuous improvement and strategy deployment – of vital importance to the sector.

The real beauty of a Strategy Execution platform for PE firms is that with compounded problems comes compounded value.

Once deployed, the platform will allow the firm to provide a consistent framework to each company and apply the same level of rigour and performance management across the portfolio.

 

Letting data support your decisions

The ability to integrate with existing core data sources, then analyse and report on the performance of the portfolio, in real time with accurate data you can trust, gives your PE firm the information needed to make strategic decisions based on facts – not feelings.

It also helps addresses the challenge all PE firms face, of how to deploy a consistent playbook in a flexible way across organisations with greatly differing maturity levels.

Ultimately, there is significant value to all parties.

“No longer financial wizardry alone but the ability to transform and improve businesses will be the modus operandi of the most successful PE funds in future.” London School of Economics

The portfolio companies benefit from a framework for effective strategy deployment and a platform to support them. The PE firm benefits as they can more effectively manage their portfolio and drive growth more consistently – that’s real value.

The steps towards safeguarding your Strategy Execution

Want to talk to about how our platform can help your PE firm? We have a roster of experienced advisors with over 100 years of combined experience to answer your questions.

To discuss how i-nexus can support your organisation, contact our team of advisors on info@i-nexus.com, or click here to book a call.

Continue your reading around this subject

Introducing a Strategy Execution platform can be difficult in organisations where comfort with traditional strategy tools remain, however, we have a wealth of resource freely available to guide your journey, such as the below:

About the author

Thomas Hagerman is one of i-nexus’ Senior Account Executives. His background across B2B SaaS solutions covering finance and HR means that he’s adept at ensuring your organisation can grow with a world-class solution. He takes great pride in being a people person and ensuring our solution matches your needs.

If you’d like to talk more about your strategic challenges, reach out to him on thomas.hagerman@i-nexus.com or connect with Thomas on LinkedIn for the latest policy deployment insights.