The Growing Trend of Corporatization in Private Equity
Welcome back to the Mid Market Insider!
Today’s newsletter is all about the growing trend of corporatization in private equity.
It’s impossible to ignore.
Let’s get into why I’m not a fan of this…
A slow-moving bureaucratic organization isn’t going to have the same impact as a PE firm that’s knocking down obstacles instead of adding red tape.
Plus, we see it often, many other firms operate with a very “spreadsheet-driven” mindset that leads to more decision-making from the ivory tower and less from the shop floor.
Private equity ought to maintain an entrepreneurial focus and a hands-on approach to investing.
Unlike larger, more bureaucratic firms, we're not afraid to roll up our sleeves and get involved in the day-to-day operations of our investments.
We work closely with management teams to drive growth and implement strategic initiatives.
Our partners bring decades of operational experience to the table, not just financial expertise.
This helps us to truly understand the businesses we invest in and make more informed decisions.
We always want to add as much value as possible.
That’s why we focus on things like adding a new piece of equipment or hiring the team’s first ever sales person.
The Four Pillars approach stands in stark contrast to the trend of financial engineering in private equity.
True value creation comes from:
Investing in PP&E (People, Processes & Equipment)
Doubling down on what the company does best
Nurturing strong company cultures
By maintaining our entrepreneurial spirit, we can be more creative in our problem-solving and more aligned with the founders and management teams we partner with.
📅 Next Week:
In next week’s newsletter, we’ll dive into why more private equity firms should focus on preserving legacies, instead of just crunching numbers and looking at businesses through a lens of data and projections.
Keep building,
Nick
P.S.
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