| 10/9/2013

Operating Partners Discuss Best Practices for Overseeing Portfolio Companies at the Capital Roundtable Conference

Operational improvement has become the key to value creation in private equity

The decline of leverage in the global financial markets and increased competition for new deals has reduced the ability of private equity firms to create value through financial engineering. In the last 5 years US private equity deal flow has dropped by 47% and the value of funds raised has plummeted by 49%. Over the same time period, available dry powder has fallen by 31% with median hold times and inventory of private equity-backed companies increasing by 48% and 34% respectively. While raising debt and easy access to capital continue to remain vital to private equity, these transformational changes in the industry are provoking fund managers to rethink their value creation strategies.

Industry pressures are motivating fund managers to rethink value creation strategies
Source: Preqin

Private equity firms are now increasingly depending on their ability to improve the operational performance of their investments as the primary lever to maximize value, generate outsized returns, achieve portfolio synergies and optimize business processes. This has fueled growing interest in the operating partner model, particularly among middle-market fund managers since much of the investible universe has moved from mega deals to the middle market.
Last week, global private capital market participants gathered at the Capital Roundtable Conference in Manhattan’s University Club to hear 20 operating partners from leading middle-market firms share their insights on how to successfully beat the expectations of fund managers, institutional investors as well as CEOs of portfolio companies. Led by Doron Grosman, Partner at Court Square, speakers came from firms like Apax, Insight Ventures, THL, New Mountain, Advent and Corinthian.
The event featured four panel discussions, keynote sessions and case studies and also offered the opportunity for networking. Best practices for effectively overseeing private equity portfolio companies by influencing deal partners and portfolio company CEOs and CFOs to find the sweet spot for value creation were discussed. Many firms in the iLEVEL community such as TowerBrook, General Atlantic and Welsh, Carson, Anderson & Stowe were in attendance. Operating partners are key consumers of financial, operational and qualitative data from portfolio companies. Private equity firms leverage iLEVEL to streamline the collection of this data and store it in a central repository. In doing so, operating partners can use the actionable insights gained to demonstrate value creation in their investments.
To learn more about how operating partners at middle-market fund managers are leveraging our Private Capital Data Platform to take portfolio operations to the next level or to join us at future events we are sponsoring, please write to sales@ilevelsolutions.com or call us at +1.646.746.1100.