Notes
A great podcast from Mckinsey on what public companies can learn from PE in order to improve their performance.
The seven lessons are:
Importance of FP&A in the company performance - > Via macro assumptions parameterized via a 3rd party, use P-Level, several inflation assumptions should be made by line item, momentum case model (assuming inertia from management, downside case modeled, back testing/continuous improvements.
Clean sheeting → rethinking what every department does. Using KPI revenue by employee, killing low value work. Centralize the team under the best leader. Focus on the high performance (O-ring theory), move talent where it can make the difference.
Breaking bad revenue → revenue growth is good as long is cash accretive - assess customer, geographic, product/service and asset profitability.
Building business → how to increase revenue growth by looking at the how (test and scale in 2/3 years). The new business play by a different rule and should be managed differently.
Look granular → go to the 2nd, 3rd , 4th layer of data of a business (segmentation, sub segmentation and “clusterization” of the data in order to treat each group differently.
Programmatic M&A - > small to medium size (scan for adjacencies and non traditional companies) business regularly bought to acquire the know-how on the way to bring new companies onboard. Have an investment thesis supporting your investments.
CEO return on time → align you time to your strategy. 6 key priorities of a CEO: (i) manage your time, (ii)building and selling the vision, (iii)build a strategic plan, (iv) monitoring current performance, (v) leading internally and (vi) leading externally.
