Champions of operational excellence

What can PEI’s award winners teach us about effective value creation?

Private Equity International just closed the book on its eighth annual Operational Excellence Awards, celebrating GPs’ value-creation success stories. While congratulations are in order for the winners, there are also a number of lessons to take away from the winning entries.

The first is that increased efforts to put ESG front and centre needn’t hurt the bottom line. Pacific Equity Partners’ ownership of Manuka Health saw the honey producer implement an initiative pioneering the use of climate and bloom monitoring technology, search for land suitable for regeneration and lead industry engagement with regulators at home and abroad – and all while growing revenue by over 70 percent.

Second is the extent to which changes at the top, made quickly and decisively, really do pay off. An AlixPartners survey shows 72 percent of private equity investors wait more than a year before switching out the CEO, but at a time of shorter holding periods that looks increasingly inefficient.

Across all three awards regions – Americas, Asia-Pacific and EMEA – winning entries set out on the path to success by replacing not just the CEO, but often the entire board. From veterinary specialists AniCura to cough medicine manufacturer Zarbee’s Naturals, new leadership turbocharged growth.

A third lesson from the awards is the increased prominence of buy-and-build as a strategy. Winning entries from the US, such as Rise Baking Company and Selmet – very different firms, one a bakery and the other a manufacturer of titanium castings for the aerospace industry – made smart acquisitions to cement their leading positions.

It’s certainly not just a US phenomenon, with European automation and robotics firm Piab benefiting from a quartet of bolt-on purchases made over just two-and-a-half years. Again, it’s all about moving quickly.

The fourth lesson underlined by our 12 award winners is the value of international expansion. Broader horizons, bigger returns, better exits.

Warehouse automation specialists AutoStore’s and Transnorm both branched out and reaped the rewards. AutoStore expanded into eight new countries, while Germany-headquartered Transnorm built up its North American presence so that the continent came to account for 28 percent of its sales last year, while also opening a production site in Thailand and building a sales team in China.

One more thing to take away? How rewarding R&D can be. All of the EMEA winners prioritised R&D, as did European company ELIX Polymers, which won the award for Outstanding Achievement in ESG and brings us back to where we began.

Congratulations to the winners. And plenty to consider for the rest of us.