On Wednesday, October 30th, The Barton Partnership hosted a roundtable with C-suite leaders from select private equity-backed businesses in Singapore, focused on strategies for navigating the unique challenges and opportunities of PE-backed firms. Topics included decision-making, the impact of PE ownership on growth, operational efficiency improvements, and talent attraction and retention.
What follows is a summary of the key points discussed during the session.
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The iterative nature of PE ownership:
A recurring theme throughout the discussion was the iterative and relationship-driven nature of working with PE investors. Participants shared that the experience can be both an enabler and an inhibitor for growth, depending on the level of alignment and communication between the management team and the PE firm.
Participants highlighted the importance of an iterative approach, where management leverages the experience and influence of the PE firm to drive faster change while maintaining clear and continuous communication to manage expectations. The PE firm was described as an “external agent of change,” responsible for guiding organisations toward key metrics and transformation goals. However, caution was advised, since the PE firm is not involved in day-to-day implementation, this can sometimes lead to misalignment on timelines and expectations.
Participants also emphasised the need for trust and transparency between management— particularly the CEO and CFO—and PE investors. The quality of trust and communication directly influences the company’s ability to tackle strategic and operational challenges, as well as management’s freedom to execute their vision effectively.
The importance of aligning investor motivations:
Participants discussed the importance of understanding and aligning the motivations of different types of investors, such as controlled investors versus venture capitalists (VCs). Participants with experience on both the PE investor side and the operator side emphasized the need to reverse- engineer what each investor wants and tailor the communication accordingly.
When navigating the different mindsets and objectives of VCs and PE firms it was noted that while VCs may be more focused on contribution margin growth, PE firms often have a different set of priorities, such as profitability and cash generation. Aligning these different goals and ensuring clear communication was crucial for the company’s success.
Balancing short-term & long-term objectives:
Participants emphasised the difficulty of balancing short-term financial goals with long-term strategic objectives in a PE-backed environment. They also discussed the challenges of navigating pressure from investors during challenging times, while also maintaining a long-term view and clearly communicating the rationale for certain decisions.
In some cases, there will need to be a trade-off between growth and profitability, emphasising
the need for clear decision-making and execution. Participants noted that in their experience, the company had to make tough choices to prioritise profitability over growth, which required a shift in mindset and communication with both the management team and investors.
Driving operational efficiencies & restructuring:
The discussion also delved into strategies for improving operational efficiencies and navigating the challenges of restructuring teams and processes in a PE-backed environment.
It’s important to take a long-term view and anticipate future needs when planning operational changes. Cascading decision-making and ownership down to middle managers, allowing them to provide input on the skills and resources required to achieve long-term goals can be beneficial.
Participants also highlighted the challenges of sustaining strategic direction and managing change during PE ownership, noting that the frequent turnover of management can disrupt the organisation’s focus and decision-making. Setting realistic expectations and clear priorities is essential, along with building a team equipped with the right mindset and skills to drive the transformation successfully.
Attracting & retaining talent:
Participants discussed the critical role of talent management in driving value creation within PE- backed companies. They emphasised the importance of cultivating a strong company culture and hiring the right talent to drive change and ensure smooth integration across diverse markets.
They also emphasised the importance of strong leadership principles in maintaining authenticity and transparency during PE ownership.
The discussions highlighted the importance of building strong relationships and clearly aligning objectives between management teams and PE investors, as well as the need to balance short-term financial goals with long-term strategic priorities.
Participants also emphasised the critical role of talent management, company culture, and open communication in driving sustainable value creation. As the private equity landscape continues to evolve, we hope these insights will help guide leaders in leveraging PE ownership as an enabler for growth and transformation, while navigating the unique challenges that come with this dynamic environment.