Lessons from Private Equity

by Orit Gadiesh and Hugh Macarthur

Book Overview

Private equity firms are snapping up brand-name companies and assembling portfolios that make them immense global conglomerates. They're often able to maximize investor value far more successfully... This description may be from another edition of this product.

• Format: Hardcover
• Language: English
• ISBN: 1422124959
• ISBN13: 9781422124956
• Release Date: January 2008
• Publisher: Harvard Business Review Press
• Length: 136 Pages
• Weight: 0.50 lbs.
• Dimensions: 0.6" x 5.3" x 7.6"

Customer Reviews

A Smart Concise Handbook Full of Valuable Lessons

Lessons from Private Equity Any Company Can Use is a smart, concise guide to restructuring and employing profit-maximizing practices applicable to any firm. The book is written in a simple language that does not require prior knowledge of private equity but uses the ideas that private equity firms use to extract value and promote efficiency. Rather than a comprehensive book on private equity, Lessons from Private Equity is a memo to CEOs describing the basics of private equity and how the fundamental goals of private equity firms can be used to improve any company. The case studies used in this book illustrate the point that utilizing private equity methods for managing a firm has led many public companies to success. The Sealy Corporation and Nestlé are the most prominent examples referred to throughout the text as examples and indeed both these firms have demonstrated great business management skills in producing profits to public investors (Nestlé more so than Sealy in recent years). The authors provide a step-by-step process for success: 1. Define the Full Potential: Use strategic due diligence to set a target "increased equity value." 2. Develop the Blueprint: Develop a plan for achieving that goal. 3. Accelerate Performance: Putting the plan into action by matching the blueprint to your company and overcoming obstacles to success. 4. Harness the Talent: Hiring the individuals that can make your company's blueprint a reality by either looking inside the company or seeking outside talent. 5. Make Equity Sweat: This is a fundamental aspect of private equity firms managing a company, relying on "managing working capital aggressively, disciplining capital expenditures, and working the balance sheet hard." 6. Foster a Results-Oriented Mind-Set: Take the private equity disciplines learned in the book and implement them permanently into your firm's culture and periodically reevaluate your company to ensure it is maintaining the formula for success. The strength of Lessons from Private Equity lies primarily in its brevity (it is just over 100 pages long) and its straight-forward approach. The ideas put forward are not counter-intuitive, they rely on basic strategic due diligence to identify underperforming areas and people to establish a more effecient firm. This book is ideal for executives and young professionals hoping to reach the higher rungs of a company, but also applies to entrepreneurs managing small companies. Lessons from Private Equity is accurately priced low because of its short page-length but I found a great deal of value in this little book. The authors of Lessons from Private Equity are Orit Gadiesh and Hugh MacArthur are both experts in improving management from the large private equity firm Bain & Company. Gadiesh serves as the chairman at Bain and has been listed on both Forbes' "The Hundred Most Powerful Women in the World" and the "Most Powerful Women in Business". MacArthur heads Bain's Global Private

Helpful look at private equity strategies

CEOs of large public and private companies may not think they have much in common with private equity (PE) investors. After all, CEOs are beholden to their shareholders and boards. Their organizations have multiple layers of management and a conservative mindset that can make change ponderous. Meanwhile, PE investors thrive in a more free-wheeling environment, sizing up their targets and sometimes taking considerable risks in hopes of delivering exceptional financial results. Authors Orit Gadiesh and Hugh MacArthur believe that traditional companies can apply six successful principles from the PE firms' playbook. While adopting the PE philosophy isn't always easy, as the authors are quick to point out, the benefits can be significant. If you feel your company is not living up to its potential, then getAbstract believes this book points out some options you might want to consider. However, you might find that the idea inspires you more than the advice the authors bequeath.

Great Book easy read

I read this over the weekend, easy read and a MUST read for everyone in business

Business Practices of PE Players for Non-PE Players

Two business experts from Bain & Company believe that successful practices adopted by PE players can be applied to different industries around the world. After having abundant consulting experience of working with PE players, they maintain that there are at least six deceptively simple rules in which PE players set a concrete and inescapable benchmark for corporate performance. Like other non-PE players, the key objective of PE players is to keep generating attractive returns for their investments within a specified time. Nowadays Gadiesh and MacArthur conclude that top quartile PE players adopt six rules to build values in their investments instead of relying mainly on asset stripping and debt loading exercises. The six rules encompass every pre- and post-acquisition step from due diligence, business renovation, and performance management to talent retention, capital allocation, and corporate culture. At first blush, senior executives from non-PE players might argue that ownership and business models of PE players are not homogeneous so that their business practices cannot be fully applicable to non-PE players. However, the six rules, particularly performance acceleration, working capital management, and talent management, are all that non-PE players should learn from if they intends to build value for their investments. This book is not too lengthy but covers many successful practices done by well-known PE players such as Bain Capital and Charles Bank Capital Partners, Centre Partners, Newbridge Capital, CVC Asia Pacific, Crown Castle, and Cerberus. It is highly recommended for senior executives who are not too familiar with business practices of PE players and for those who are getting lost in the clouds or being handcuffed by tradition-bound and antiquated systems while spearheading operational performance improvement for their firms.

How to make any business more valuable

This is one of the titles in the "Memo to the CEO" series published by Harvard Business Press, each less than 200 pages in length and superbly produced. In fact, none of them is a "memo" nor were any of them written only for CEOs. In this volume, Orit Gadiesh and Hugh MacArthur explain how to make any business more valuable while acknowledging that the lessons to be learned from the private equity (PE) industry are not rigorously and consistently applied by businesses around the world. Why? "We see two main reasons for this: first, the application of these lessons drives real change in many businesses, and, for better or worse, change brings risks, both real and imagined...Second, many leaders apply the lessons that we will discuss, but incompletely. It is easier to do "fine" than to the "best" a company can do. We call this [begin italics] satisfactory underperformance [end italics] - a pervasive disease in business that is the direct target of this memo." Gadiesh and MacArthur are eminently well-qualified to identify and then examine the tools and techniques used by the best PE firms. She is chairman of Bain & Company, the first management consulting firm to develop a global PE practice that is now the largest of its kind. MacArthur heads it. Moreover, even a cursory review of their respective careers suggests a scope and depth of real-world business experience in all areas of operations with global companies in a variety of industries. They speak with unique authority when asserting that the smartest PE investors "have realized that the only way to reliably increase the value of their portfolios is to maximize the operating value of the underlying businesses in them. For this reason, the best PE firms have shifted many of the resources that they once poured into financial engineering to ward creating value - and they are doing it in a way that is more systematic, focused, and aggressive than the practices in most companies." It should be noted that the lessons they discuss and the recommendations they provide with those lessons can be of substantial value to decision-makers in any organization, whatever its size and nature may be. For example, "to improve profits and stock price [or value if the company is privately owned], you need to make strategic choices with a clear picture of the full potential of your company in mind." Define that potential by answering, with rigor and accuracy, this question: "How high is up?" Next, develop as "blueprint" or "road map" for getting to that full-potential destination. That is, the "who, what, when, where, and how" while establishing and then sustaining strategy, resources, execution, and measurement in proper alignment. The next objective is to accelerate performance at all levels and in all areas of the given enterprise while harnessing the talent (i.e. hiring, "growing," and retaining only those who possess the talent, skills, experience, and character needed) because "the best-laid plans go nowhe