The Structural Shift in Value Creation

Value creation planning is being considered earlier and earlier in the deal life cycle.?

Why the shift? The answer lies in the recognition that the earlier stages of a deal offer a faster runway post-deal for implementing targets and setting out milestones. Waiting until post-completion to craft a value creation plan runs the risk of missing immediate opportunities or facing greater challenges in aligning a vision and communicating that clearly to all stakeholders. It's about securing access to all value levers, data sources, and analytical techniques right from the start.?

The game-changer in this new paradigm is the emphasis on a balanced approach to costs and revenues during the development of value creation plans. Successful firms are navigating between enhancing operational efficiency and driving revenue growth, acknowledging that both elements play pivotal roles in achieving desired returns.?

Delaying the value creation process or relying too heavily on traditional levers can jeopardise the success of an investment. The current landscape demands a proactive stance, leveraging digital transformation opportunities and embracing a more comprehensive, enterprise-wide transformation approach.?

Traditional levers like buy-and-build strategies and talent acquisition remain essential, but there's a new cast of characters stealing the spotlight: technological and digital transformation and the growing influence of Environmental, Social, and Governance (ESG) factors.?

Private equity firms, in their quest for increased multiples, find themselves under greater pressure to significantly enhance operational value. This pressure has given rise to a sharper focus on value creation planning, demanding a disciplined and transparent approach to execution.?

Value creation should be a fundamental part of the overall investment thesis and fund strategy.?

The winners in this shifting landscape are those who engage in value creation planning and strategies much earlier. They dig deeper, partner closer with the senior leadership team and specialist advisors, to ensure that VCPs not only come to fruition but also propel each investment to its highest potential.?

The landscape of value creation in private equity is evolving, and those who embrace this shift, adapt to the changing levers and integrate value creation seamlessly into their deal-making process will undoubtedly emerge as the leaders of tomorrow's investment landscape.??

I collaborate closely with businesses and investment directors to craft tailored value creation plans that drive success. Connect with me at Jadis.Tillery@ikwe.co.uk for a detailed discussion on how I can enhance your strategies and support your goals.?

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