The 5 Cornerstones Of A Successful Private Equity Infusion8:13 PM EST Thu. Jul. 12, 2007
1. Laws of Attraction
CompuCom immediately met Platinum Equity's hallmark criteria. With a strong customer base, recurring revenues in the services sector, solid customer relationships and a strong employee base, CompuCom was identified early on as being a very attractive acquisition candidate. Platinum Equity viewed the acquisition of CompuCom as an enormous opportunity to build value through the increasing consolidation in the IT services marketplace.
2. Marrying Philosophies
Specializing in the merger, acquisition and operation of its portfolio companies, Platinum Equity isdifferent from other M&A firms by its operational focus. Platinum Equity's philosophy focuses on adding value to the enterprise and centers around growing the profitability and cash flow of the business. As a private company, Platinum Equity is able to make long-term strategic decisions that enhance the value of its portfolio companies, as with CompuCom, instead of focusing on quarter-over-quarter financial results.
3. High Growth Opportunities
Platinum Equity seeks to purchase companies on a strategic basis and to be able to operate them profitably from a cash flow perspective. As demonstrated with the CompuCom transaction, Platinum Equity typically acquires companies where there is untapped potential and growth opportunity. Once Platinum Equity acquires a company, the firm immediately sets a focused strategy for the go-forward business. Their core focus is always building and growing organizations for long-term success.
4. Long-term Partnership
By transitioning from being a publicly traded company to being one that is privately held, CompuCom has reaped the benefits of not having to be distracted by short-term financial results and fluctuations of the stock price and has a renewed focus on achieving long term goals. In fact, Platinum Equity, as a true business partner, has helped CompuCom focus more on making longer-term decisions to ultimately grow the value of the business more so than merely growing the top line revenue.
5. Autonomy is Key
As a partner in developing a long term strategic plan for CompuCom, Platinum Equity encourages autonomy within its portfolio companies and encourages an entrepreneurial management style. One other strong advantage of having a parent company that is an M&A firm is that Platinum Equity actively seeks add-on acquisitions that would broaden an existing portfolio company's expertise, diversify and improve product and service offerings, expand resources or grow market share. As an example of this, immediately after acquiring CompuCom Systems, Platinum Equity acquired and subsequently merged the General Electric IT Solutions business into CompuCom. The relationship between Platinum Equity and CompuCom provides a stable base for this type of activity and strategic decision making.