Welche Kennzahlen tragen eine eindeutige Aussage zum Projekterfolg oder Misserfolg bei?
In a recent online meeting held by AIFI – The Italian Association of Private Equity, Venture Capital and Private Debt - Alberto Belloni, Managing Partner of Belloni & Associates spoke to around 130 attendees about the challenges of “buy-and-build” operations in Italy.
The buy-and-build strategy is used frequently by private equity (PE) firms to create value and increase returns. It involves buying a target company in an industry where the PE firm usually invests. In implementing the strategy the PE firm aquires the majority of the shares of the target company, aiming to sell the target company within a period of five to seven years at a higher price, often double or triple the original acquisition price. Obviously, this requires that the target company grows and becomes more profitable in a very short time, usually by combining organic growth with external growth, frequently also on an international level.
As these kinds of operation are complex and delicate, PE firms usually approach an executive search firm and request their support in finding and recommending the right candidates for the executive roles: CEO, CFO, etc. In order for executive search consultants to perform this service successfully, an understanding of the “intangible” aspects of the target company’s culture is critical. Newly hired executives not only have to achieve the goal of rapid growth, but also have to be fully compatible with the organizational culture and its current stage of life.
“We are seeing a huge increase in buy-and-build operations in the Italian economy as both domestic and foreign PE groups search for ways to improve returns. With currently around 200 operations a year, about 80 % of PE target companies are SMEs as these struggle to cope with global challenges, and need financial funds in order to grow. It’s not completely rare for a PE firm to own up to 20 companies in different sectors. However, not all operations succeed and, the facts are on the table, around 60% of the failures are due mainly to management misalignment. Investors have a different and often very business-centric, financial vision, expecting growth at twice or three times the normal speed, for example. Moreover, when a foreign PE firm gets involved there will be cultural change, perhaps even a cultural clash deriving partly from a lack of local HR management competencies, assessment and strategy expertise, to mention but a few. I call these the intangible aspects and claim that they have a huge tangible impact on investment performance. Furthermore, the challenge of succession is hard to accept. Resistance to change is inevitable.
As experienced executive search and human resources specialists we are the perfect partner for the hiring process and we also offer support with essential functions such as due diligence and audit management and HR processes to reinforce the integration. There is no one recipe for all – but with a series of tools we can help PE firms, target companies and entrepreneurs reduce the risk of failure. Human capital is an integral part of business, a critical success factor, yet it is often underestimated and unstructured. We can all benefit from more dialogue and action on this topic.”
Dr. Matthias Rode is the Regional Director EMEA of AGILIUM Worldwide and your main contact in Germany: For any questions please contact him directly.
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Verfasst von: Agilium Worldwide