Avram Miller, a well regarded Silicon Valley luminary, has recently published a memoir which chronicles his journey in the world of technology. It is called, The Flight of a Wild Duck, which is how Intel’s CEO, Andy Grove referred to him because Miller would always chart his own course. This included founding Intel Capital, which became the most successful corporate venture group, and playing a leading role in the creation of residential broadband. The book is full of interesting stories of key figures in the tech world and well as important lessons.
“There were a number of reasons why I wrote this book. I was in the room when many important things were decided and I had a lot of stories. But I also felt that my life story might be an inspiration. Having worked as a merchant seaman, and without any university background, I ended up as an Associate Professor in Medicine at the age of 29. Having transitioned to work in the computer industry, I was responsible for a large engineering group at Digital Equipment Corporation and then later joined Intel where I was one of 28 corporate officers. My book explains the role that risk taking, creativity and institution played in my success. I hope my book will encourage others to break from more traditional approaches.”
“For private equity funds, the clock starts ticking the second you sign, the second you own your new portfolio company. So the Holy Grail is: how do you add superior value?” That’s how InterimExecs CEO Robert Jordan helped kick-off a recent panel about adding value to portfolio companies. Sponsored by InterimExecs and hosted by Private Equity Career News publisher David Toll and John McNulty’s Private Equity Professional, panel experts shared best practices for value creation.
On the panel were Jordan, Micah Dawson, vice president of Portfolio Support at Trivest Partners; Pericles Mazarakis, managing partner of TriSpan; and Mike Zawalski, an InterimExecs RED Team member who serves in executive chairman roles with PE backed portfolio companies. Here, we round up the top insights from the panelists, everything from the importance of monthly operation reports to establishing trust with the business owner and investing in human capital.
Private equity funds are entering a new phase that requires new tactics to be successful against many alternative sources of funds. With a vast reservoir of dry powder – $1.5 trillion waiting to be deployed – PE funds seeking the whip hand will build and pivot while the economy is reinventing and reviving in 2021 and 2022. But what worked in the past won’t work in the future. Moving forward, adding value will require more attention to management fit for the purpose of rapidly transforming portfolio companies.
“Every good private equity professional will tell you that the most important factor behind a successful investment is the management team,” said Eric Jones, a partner and member of the corporate and private equity groups at Detroit law firm Honigman LLP. Jones was a speaker at the University of Michigan Private Equity Conference held virtually in September 2020 and attended by InterimExecs. “You can have even market share, but without a very strong management team, it’s not going to be sustained. The business isn’t going to grow and the investment piece isn’t going to be realized,” he said.
The COVID-19 pandemic and global economic lockdown has seen merger and acquisition (M&A) activity plummet. From $3.9 trillion in global takeovers in 2019, announced deals plunged 51% in the first quarter in the US according to Refinitiv. Uncertainties in the business and capital markets have led to buyers delaying or cutting back on their acquisition plans. But with crisis comes opportunity. Those able to navigate the new risk landscape may find compelling deals on the other side of the pandemic. Now more than ever, expert help with strategic planning, modelling out “what if” scenarios when the world frees up from lockdown, and preparing better for post-acquisition merger integration can help owners succeed in acquiring or being acquired.
it’s time for a private company to go public, or fundraising is needed on a
large scale, an IPO is not the only option. There’s also a less-well-known and,
until recently, less-well-respected option: a reverse merger into a public
shell oftentimes called an Alternative Public Offering (APO).
process, which can be faster and cheaper than a traditional Initial Public
Offering, is growing in popularity and might grow faster in our confusing
Jordan (no relation to InterimExecs’ CEO Robert Jordan), an investment banker
and CFO who spent 30+ years working in biotech, engineered a reverse merger of
a biopharma company in 2019. He says that while the virus has caused capital
flow interruptions, investors in the private markets are still providing
capital to companies with novel / scientifically validated biotechnology companies.
That means reverse mergers and PIPEs (Private Investment in a Public Entity)
can still raise money needed to complete their deals. He estimates that about
20 biotech firms debuted in the public markets last year as a result of reverse
mergers and the number is on track to repeat in 2020, despite the virus.
But let’s back up a step and begin at the beginning.
incredible success of private equity over the past couple decades has made
clear to many aspiring company owners and investors, if you can find and
acquire a decent company, its possible to earn great returns. This has fueled a
new class of individuals seeking to launch their own search funds. What exactly
is a search fund and how do you become successful at it? Let’s explore.
It might be a challenge to develop a new medical facility in the United States. But it’s nothing compared to developing one in sub Saharan Africa.
That’s what Dr. Rodney Armstead learned on his 5-year quest to open the first specialty practice and minimally invasive surgery center in Accra, the capital city of Ghana.
LuccaHealth Medical Specialty Center has two campuses in Accra. One opened in November 2019 and the other in February 2020. Together, they will offer 11 specialties and minimally invasive (laparoscopic) same day surgery when LuccaHealth is fully operational at the end of 2021:
U.S. Banks are growing concerned — if not alarmed — and are reevaluating just how lax they are when it comes to handing out commercial loans. With sour loans on the rise, that’s not a pretty picture for companies that rely too much on credit lines or commercial loans. This is, in essence, a self-imposed business risk, as they are more dependent and susceptible to any fluctuations that occur.
A recent Financial Times article reported that non-performing loans increased by 20% at ten large commercial lenders. How much of an impact is that on the bank industry exactly? According to the Financial Times analyst, that’s a hefty $1.6B in the first quarter alone, a significant shift from credit quality since 2016, an era where the dust had settled from crashes and subsequent defaults on loans. The future started looking bright. Lending portfolios and credit quality began to improve.
With merely three years of positive momentum, fast forward to present day and all that has changed and not for the better. “Since most businesses utilize a credit line or other commercial loans, any slowdown will impact all types of commercial lenders – banks, asset-based lenders and factors,” said Yoav Cohen, an interim executive who has spearheaded eight turnarounds and liquidations, each one successful in paying off secured lenders in full. Cohen has seen it all, serving in roles as varied as interim CFO, COO, and a Chief Restructuring Officer.
As an executive who has spent his career growing companies, taking companies public, and successfully selling businesses, Charlie Shalvoy says the first thing he does when he parachutes into a company is begin with an assessment. Whether the company is venture-capital backed or private, or in manufacturing, energy, semiconductors, or industrial equipment, figuring out the current state of operations is always the first step. Charlie divides the stages an interim executive goes through in taking action in a new company into four phases:
Phase 1: Taking Hold (90 Days)
When a company seeks to expand into new markets or scale operations to support current and future growth, Charlie takes on a role ranging from Interim CEO to Executive Chairman, where he coaches and serves alongside the CEO and management team. He describes that in the taking hold phase, an interim executive identifies what’s broken – even fast growing companies need repairs. What is getting in the way? What is causing distress?
“How many businesses find their data to be a complete mess?” Christie Kelly, former CFO of JLL Real Estate questioned as she and a panel of high-profile CFOs discussed the changing landscape for financial leaders at an event held by the National Association of Corporate Directors.
In today’s world every business now seems to be in the game of being a technology business. That means that a new importance is placed on data, especially for CFOs.
“How do we transition to turn it (data) into insights, and how does that change finance to have more technology, process, and Six Sigma?” Kelly said.
The role of the CFO has evolved, due to the accelerated pace of the digital age. How? A strategic CFO drives transformational change. A CFO must not only understand a business from start to finish to provide financial excellence, but also must predict what is coming from a strategic standpoint and be ready to evolve.
First-year Change Agent members have access to the Interim Institute’s 4 hour audio program on the Fundamentals of Interim Management, and a one-hour strategy session to help jumpstart their interim career.
*$200 additional charge for Accelerator Program only applies for first-year members. After the first year, membership renews at $485/year.