Our CEO, Rami Cassis, recently wrote an article for Mergers & Acquisitions about why GPs need to get hands-on with operational change, starting at the top.
Private equity deal flow has dried up, with the leverage that once greased the industry reduced to a trickle and exit routes through sale or IPO effectively shut. GPs are confronted with a challenging business market for the first time in a decade.
With the usual levers unavailable, Rami believes GPs must look inside their portfolio companies for value rather than waiting for the market to turn. This shifts the focus from financial engineering as the primary driver of returns.
That means being far more proactive and hands-on with operational change, starting with the management team. In practice, this might involve bringing in new executives who can accelerate performance rather than relying on current leadership.
Firms unwilling to make leadership changes risk holding assets they cannot sell when the window reopens. Tying up capital will drag fund returns for years.
Read the full article at Mergers & Acquisitions here.
Featured image courtesy of Vitaly Gariev via Unsplash.
