As a publication, we've long argued that focusing on genuine operational value creation is the only sustainable way for the private equity industry to deliver great performance throughout the economic cycle.
What's more, talking about these success stories is the best way to convince the sceptics that the private equity model can genuinely be a force for good – an argument the industry can ill afford to lose.
That’s why last year we launched ‘Building Value’, a campaign to identify and celebrate best operational practice – which culminated in October with the results of our first ever Operational Excellence Awards. Judged by a panel of independent industry experts, these awards were intended to recognise those firms around the globe with the most compelling operational improvement stories – and to examine exactly how they managed to create value.
The response we had from the industry across the globe made it very clear to us that this issue is currently top of mind for any group worth its salt. As the IR head of one of last year's winning firms told us afterwards: “This helps show LPs that we really do do operational work – not like some firms that just claim to.”
So this year we’ll be running the awards again – only with a slight twist.
When our judges sat down to select the winners last year, the thing they found hardest was to compare two deals that were ostensibly in the same industry sector but were wildly different in scale. After all, a small-cap growth business in an emerging market presents a very different sort of operational challenge to a multi-billion-dollar listed business in a developed market, say. And we wanted to recognise that more explicitly.
So this year, instead of splitting our three regions (EMEA, the Americas and Asia) by industry, we're going to split them by size instead, with three separate categories for each one – large, mid- and small-cap. We think this will make for a fairer, apples-to-apples comparison of deals within a particular category.
Otherwise, though, all the rules are pretty much the same. We're looking for GPs to submit entries for any deal exited in the last year (to include partial exits). We'd like to see as much detail as possible about what you changed and how you changed it, and as much concrete evidence as possible of the difference it made (there's a short entry form available for download HERE, but feel free to submit supporting information where appropriate). Final judging will take place in August, and we'll announce the winners in the October issue of PEI.
The industry has so many good value creation stories to tell. And we need to do a better job of that if we want to convince politicians, regulators and business owners that private equity really does help to build better businesses. Do your bit by clicking HERE and entering.
PS – thought leading operational specialists will soon be gathering in London to talk about the challenges of value creation. Click here for more info and to register for our second annual Operating Partners Forum Europe.