Independent sponsors: How do you look to create value in your deals?

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December 05, 2024

by a searcher from Concordia University in Boston, MA, USA

As an independent sponsor, what are the most critical aspects for immediate value creation? Given that most sponsors work with management and don't take direct day-to-day roles in the companies operations, how does one create value to both investors and personal self? Would be great to share any specific examples of successful value creation initiatives you've seen work well in particular industries.

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Reply by a searcher
from University of Miami in Dallas, TX, USA
Immediate value creation typically focuses on strategic initiatives that drive growth and operational improvements without requiring direct day-to-day involvement in the company’s operations. Critical aspects include aligning the company’s goals with market trends and investor expectations, such as pivoting to high-growth product lines or entering underserved markets. Operational efficiency is another key area, which can be achieved by driving cost optimizations, automating processes, or renegotiating supplier contracts. Enhancing leadership is equally important, whether by bringing in specialized talent, restructuring teams, or mentoring existing management to unlock their potential. Revenue growth initiatives, such as forming strategic partnerships, expanding distribution channels, or improving pricing strategies, also play a significant role in creating value. Additionally, managing capital efficiency by optimizing debt, aligning financial structures with growth objectives, or improving working capital can make a considerable impact.
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Reply by a searcher
from University of Chicago in Chicago, IL, USA
Implementing EOS is pretty critical for us and does a good job building strategic alignment with management, identifying any right people, right seat issues, and gets us involved on a weekly basis with the business.

Additionally, we try to bring processes to help recruit and assess talent. We follow the WHO (https://whothebook.com/) method and use Culture Index for personality surveys.

I'm also curious to learn what other tools independent sponsors utilize to create value.
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