Business

Private equity’s evolution: From money collectors to business builders,

Published

3 years ago

April 17, 2022

New Mountain Capital CEO Steven Klinsky shows ways to beat inflation and stagflation.

NEW YORK — Investment funds are expanding. They are a part of the U.S. financial market. Private equity funds’ total investment funds typically invest in stocks that are not listed, amounting to $1.036 trillion by 2024. According to the American Investment Council, this is an increase of 50 per cent over the year prior.

Some believe that private equity funds can be the primary driver of U.S. economic growth through investments in startups and companies that are not well-known but have high potential.

How has the market changed, and what can they provide? Steven Klinsky, founder and chief executive officer of New Mountain Capital, said funds have changed from merely collecting money to managing and taking strategic decisions for businesses that invest.

Kinky, who has more than 40 years of industry experience, has also stated that this might not be the best time to sell investment companies with the current increase in inflation and the possibility of stagflation. Instead, private equity firms should be patient until the financial markets’ climate improves.

Edited excerpts of the interview are included.

Q: You’ve been in working in the field of private equity for quite a while. What is the way the industry has changed?

Private equity has developed over the last 40 years since its inception, and when correctly executed, it is now a type of business building rather than a method of financing. The highest interest rate ever recorded in American history was achieved just before I joined Goldman Sachs in 1981. The 1980s were when we saw decreasing interest rates, rising inflation, and a rising market for stocks. Thus, the initial concept that private equity would be primarily about borrowing. Over the years, however, the most reputable private equity firms have become highly efficient, extremely strategic in certain industries, and real business builders.

Q: When you were in a downturn in your economy and when the market was not performing, What was the most effective method to earn money?

A: Then again, in 1981, when the market was at its lowest, you could purchase things at a cheap cost. Many of the businesses were fashioned by conglomerates of corporations throughout the decade of the 1970s. They could be trading at times at a lower value than book value, and it was possible to earn profits with lots of leverage in the current inflationary context. The number of dollar gains was small compared to today’s standards because there was so little equity, but the multipliers could be quite high. For instance, it could be an acquisition of $80 million with $1 million in capital and $79m in debt. If the company’s value was increased by $100,000,000, you would have made 20 million from one million. This is 20 times your capital, and private equity started to draw enormous interest.

Q: What’s happening within the private equity sector?

Private equity invests millions of dollars and earns billions of dollars of profits. Private equity is more sophisticated and professional now than in the days with only a handful of people working in the early 1980s. It’s not the same as the old film “Wall Street” in which Michael Douglas talked at the beach using a gigantic phone. It could be private equity back during the 80s. It’s not what it is today. New Mountain employs about 200 employees at its headquarters and employs more than 66,000 people in our businesses in the field.

Furthermore, we can now step into the business and create a company. For instance, we own the company Avantor. It was worth around $290 million when we discovered it in 2010. It is the company. It is now worth $25-$30 billion in value and is part of the Fortune 500.

A: Many people are concerned about stagflation due to market conditions. What is the most effective strategy for managing this private equity portfolio?

A: The most effective way to manage the private equity fund is to consider every company as a distinct business similar to your family’s own business. Consider the ways you could change and develop your company. Therefore, no matter what’s going on in the world economy, if you have an individual business and can improve the business, you will be able to outperform purchasing an index of stock. We also attempt to select industries we call “defensive growth” sectors, like life sciences or the upgrading of power grids in the U.S. power grid, which can expand regardless of whether the conditions are favourable. Additionally, even if the rates increase, however, they remain low compared to the rates before the beginning of my career. Also, in the private capital market, in case it isn’t the best time to sell your company, it is generally best to wait to sell until market conditions improve.

Q: A few portfolio companies are looking for strategic buyers rather than the initial public offer to exit strategies. Are you in this scenario that is currently in place?

A: Yes. The window for public companies for a company in the U.S. is pretty much over. However, there are many opportunities for your company to be bought because, for instance, the big corporations might wish to grow their business or may want to expand into an additional market. As a seller, you could help the buyers reach the direction they’d like to go strategically. Although the buyers still have plenty of capital. They continue to borrow money with low-interest rates compared to other years of our history. Many buyers want top-quality and consistently growing businesses, both for institutions and strategic buyers, even when those who are seeking public IPO markets aren’t as plentiful.

Do you think the current market or economic climate makes it difficult for startups to make a smart sales plan?

A: I think that if you have a great technology that is working and is reliable, you have the opportunity to sell to a strategic investor. The problem for solely venture capital firms is that, a year ago, things were so good that they may have been able to get a price they are unable to reach now. They could be disappointed by the amount a real company would give them today because they had an abundance of optimism.

Q How do you interact daily with Japanese investors

A First Japanese investor came to our company in 2005. We have added more investors over the last 17 years, and now we currently have more than 20 Japanese investors. They’re a mix of major investors, including regional banks and insurance companies and endowments. One of the reasons they wanted to invest in our funds was to find out if potential opportunities were available to their customers from an M&A standpoint. We also take the mindset of prudent leverage and have tried to not overtake on debt for our clients. We want our businesses to expand. We think this method has been especially attractive to Japanese investors when managing the risk and protecting against the downside.

Question: Which other investment strategies would general investors like?

An A: The Social Dashboard is one of the dashboards. It provides details on every one of the portfolio businesses we manage. We show how we have created or added over 61,000 jobs across our businesses with no jobs lost. The report also reveals how we pay excellent salaries and how we have invested $8 billion in R&D software and capital expenditures. We’ve also never had an equity-related bankruptcy or failed to pay interest, and we’ve racked up over $74 billion in value growth. This dashboard was launched in 2008 after Lehman Brothers went bankrupt. There was such frustration across the U.S. over Wall Street businesses and private equity, which many believed had destroyed the world.

Q What is the most important aspect of acquiring good companies Japanese companies?

A: Identifying a reliable “defensive growth” sector is the initial crucial step. The second thing to consider is to run the business effectively by attracting the best individuals and also to increase the latest technology, sales and size to help grow the company in a manner that it’s not currently doing. It’s not about the item you purchased, however, but what you can do to improve it. Also, you should be careful not to pay too much. In reality, the final 4or 5 per cent of the purchase cost shouldn’t affect the value of the investment if you’ve got a plan that you think will significantly boost the company’s size.

Question: What did you find the most remarkable about Panasonic purchasing Blue Yonder last year?

When we first purchased the business, it was known as Red Prairie. It was a modest software company. It did not offer software as a service. It didn’t possess artificial intelligence. It was not a global company. Through the years we ran it, we were able to make a secure and peaceful company and bring value and technology to it. Panasonic has been our co-owner in Blue Yonder for the last few years. They held 20% of the company before buying the entire company. They served on the board and assisted in expanding Blue Yonder into Japan. We, along with Panasonic and the other owners, collaborated to improve the business.

Panasonic sought global leadership in supply chain technology which is a long-term market. Since they first purchased 20 per cent of the company and had been in the boardroom and had a deep understanding of the business from the inside. We believe they were smart in the manner they started their study and later purchased the business. We would like to see them do extremely successfully with it.

Business

How the Rise of AI and Automation is Impacting the Accounting Profession

Published

1 week ago

December 13, 2024

Anita Kantar

The adoption of advanced technologies is reshaping how businesses handle financial processes. Tools powered by artificial intelligence (AI) and automation are transforming traditional workflows, introducing both opportunities and challenges for professionals in finance.

Accountants must now adapt to thrive in a landscape dominated by innovation.

Key Points:

Automation reduces manual data entry, boosting accuracy.
AI enables predictive insights for better decision-making.
Technology frees up time for strategic tasks.
Skills in data analysis and AI tools are essential.
Ethical considerations are critical for implementing automation.

Automation and Its Role in Streamlining Financial Tasks

Automation tools have become indispensable for reducing repetitive and time-intensive tasks. Functions such as payroll processing, tax filings, and financial reconciliations can now be completed faster and with fewer errors. Businesses looking to optimize their operations rely heavily on platforms like those recommended by Accountancy Capital for sourcing qualified professionals. For more information visit their website www.accountancycapital.co.uk.

By eliminating the burden of repetitive tasks, automation allows accountants to focus on advisory roles, providing higher-value services to clients. This shift highlights the need for upskilling to remain competitive in a changing landscape.

Source: rvnatech.com

How AI Improves Decision-Making in Financial Management

AI tools analyze vast amounts of data to identify patterns and trends that humans might overlook. This capability enhances decision-making, particularly in areas like forecasting and risk assessment. For example:

Predictive analytics ─ AI can anticipate cash flow trends or market risks, giving businesses a proactive advantage.
Fraud detection ─ Algorithms flag irregularities in real-time, reducing financial losses.
Expense optimization ─ Automated systems recommend cost-saving measures based on historical spending patterns.

Leveraging such capabilities requires an understanding of technology, coupled with expertise in interpreting results for actionable insights.

Challenges Created by Technological Advancements

The rapid adoption of AI and automation poses challenges for professionals, including:

Skill gaps ─ Transitioning from traditional methods to tech-driven workflows require upskilling.
Job displacement ─ Roles focused on manual tasks are at risk of becoming obsolete.
Ethical concerns ─ Decision-making algorithms may introduce bias if not properly monitored.

Mitigating these challenges involves ongoing education and embracing continuous professional development.

Source: runeleven.com

Skills Accountants Must Develop to Stay Relevant

The changing landscape necessitates a shift in core competencies. Key skills include:

Proficiency in data analysis tools ─ Knowledge of software that integrates AI is crucial for staying relevant.
Soft skills ─ Communication and advisory capabilities remain vital, even as technology handles routine tasks.
Ethical awareness ─ Understanding the limitations and implications of technology ensures responsible implementation.

Combining traditional expertise with technological fluency is the key to long-term success.

Benefits of Automation for Accounting Firms

Automation tools deliver measurable benefits for firms, including:

Efficiency gains ─ Faster processing of routine functions, reducing turnaround times for clients.
Cost savings ─ Automated workflows lower operational expenses.
Scalability ─ Firms can handle larger client bases without increasing staff.

By adopting technology thoughtfully, firms can maintain a competitive edge while providing exceptional service.

Source: mcgowanprofessional.com

Ethical Implications of Adopting AI in Finance

AI’s growing role introduces ethical concerns that professionals must address. Bias in algorithms, privacy concerns, and transparency issues are common challenges. Firms must establish guidelines to ensure that AI tools align with ethical practices. Regular audits and accountability measures help maintain trust.

Future Trends and Opportunities in Financial Automation

Looking ahead, technologies like blockchain and machine learning will further transform financial practices. Accountants who embrace innovation will find opportunities in consulting, compliance, and strategic planning. Staying informed about emerging trends ensures readiness for new developments.

Conclusion

The rise of AI and automation is not just reshaping workflows but redefining the role of accountants altogether. By investing in upskilling and adopting tools thoughtfully, financial professionals can transition from traditional roles to strategic advisors, ensuring continued relevance in an evolving landscape.

Business

Lead Generation Hacks 2024 – Turning Cold Leads into Warm Fuzzies

Published

2 months ago

October 9, 2024

Tina Gondolin

In the ever-evolving landscape of digital marketing, mastering lead generation has become paramount for businesses aiming to thrive in 2024. The age-old challenge of converting cold leads into enthusiastic prospects is not just an art; its a science that requires a fresh approach.

As we journey into this new year, innovative strategies are emerging to warm up those chilly connections that often leave sales teams cold. Gone are the days of one-size-fits-all tactics.

Instead, a mosaic of personalized outreach, compelling storytelling, and the strategic use of technology can transform a fleeting encounter into a meaningful relationship. In this article, we will explore clever hacks that not only spark interest but also nurture a genuine connection, turning distant leads into warm fuzzies—the kind of leads that not only convert but become champions for your brand.

Lets dive into the techniques that will help you turn the frosty silence of cold leads into a vibrant dialogue that resonates well into the future.

Crafting Compelling Content

Source: guaranteedseo.com

Crafting compelling content is the cornerstone of transforming cold leads into warm fuzzies. Imagine each piece you create as a personal conversation—rich, engaging, and tailored to resonate with your audience’s needs and aspirations.

Start by weaving in storytelling elements that evoke emotions, whether it’s a relatable challenge or a triumph that mirrors your audiences own journey. Use a mix of vivid imagery and succinct, punchy statements to maintain intrigue.

Pose questions that invite reflection, making your readers feel involved and valued. The goal is to create a tapestry of words that not only informs but inspires action—nudging the reader ever closer to giving you their trust, and ultimately, their business.

Remember, the magic lies in the unexpected twists and turns of your narrative, pulling them in and leaving them eager for more.

Personalized Outreach Strategies

Source: inc.com

Personalized outreach strategies can transform the mundane into the memorable, crafting connections that resonate deeply with your prospects. Imagine diving beyond the surface, uncovering the unique quirks and preferences of each lead.

Instead of sending a generic email, why not share a tailored message that references their recent project or highlights a common interest? This level of attention turns cold leads into warm fuzzies—a feeling of genuine connection and understanding. Utilize social media insights, or even simple Google searches—delve into their world to strike a chord that compels engagement.

When your outreach feels like a conversation between friends rather than a sales pitch, you open the door to lasting relationships that flourish. Create that spark, and watch how leads become advocates for your brand.

Innovative Email Campaign Techniques

Source: entrepreneur.com

In the rapidly evolving landscape of digital marketing, innovative email campaign techniques have emerged as game-changers for turning cold leads into enthusiastic prospects. Imagine crafting personalized, attention-grabbing subject lines that not only spark curiosity but also align with the unique pain points of your audience.

Consider employing dynamic content that adapts in real-time, showcasing tailored offers or insights based on recipient behavior and preferences. Storytelling is another powerful tool; weave narratives that resonate emotionally, allowing recipients to feel a genuine connection to your brand.

Incorporating interactive elements, such as surveys or quizzes, can foster engagement and encourage replies, transforming a one-sided communication into a lively dialogue. Finally, leveraging automation with precision can ensure timely follow-ups that feel personal rather than robotic, striking the sweet spot between efficiency and warmth.

By weaving these techniques together, your email campaigns can flourish, nurturing a relationship that ignites interest and cultivates loyalty.

Conclusion

In conclusion, transforming cold leads into warm prospects is not only achievable but essential in todays competitive landscape. By employing innovative strategies that prioritize personalization, value-driven content, and strategic follow-ups, businesses can cultivate meaningful relationships that foster trust and engagement.

As we move into 2024, embracing these lead generation hacks will not only streamline your sales process but also enrich the overall experience for potential customers, paving the way for lasting connections that ultimately drive growth and success. Start implementing these techniques today, and watch as cold leads evolve into warm fuzzies that will benefit your business for years to come.

Business

How to Attract Your First Clients to Your Mold Remediation Business

Published

4 months ago

August 28, 2024

Tina Gondolin

Starting a new mold remediation business can be both exciting and daunting. You have the expertise and the ambition, but how do you turn that passion into real clients? Attracting your first customers is a crucial step that can set the tone for your business’s future.

It’s not just about having the right tools or knowledge; it’s about weaving a compelling narrative that resonates with potential clients. In a world where trust and reliability are paramount, being visible and approachable is essential.

Let’s explore various strategies, from leveraging local marketing tactics to harnessing the power of word-of-mouth referrals. With the right approach, you’ll transform your fledgling business into a go-to choice for mold remediation in your community, one satisfied customer at a time.

Build a Professional Brand

Building a professional brand is essential for establishing credibility in the competitive field of mold remediation. Start by crafting a compelling narrative that highlights your expertise and genuine commitment to health and safety.

This narrative should weave together your experience, certifications, and the values that drive your work. Next, invest time in creating a polished online presence—think well-designed websites, engaging social media profiles, and insightful content that speaks directly to your target audience’s concerns about mold issues.

Don’t underestimate the power of customer testimonials; they serve as social proof, significantly enhancing trust. Additionally, consider local networking opportunities, as face-to-face interactions with potential clients can elevate your brand’s visibility and reputation.

In a world saturated with options, a strong professional brand doesn’t just set you apart—it draws clients eagerly to your doorstep, ready to engage your services.

Networking and Community Engagement

Networking and community engagement are essential lifelines for launching your mold remediation business, as they bridge the gap between you and potential clients. Attend local home improvement expos and trade shows, where you can showcase your expertise and services.

But don’t stop there—collaborate with real estate agents, insurance brokers, and home inspectors, as these professionals often encounter clients in need of your specialized services. Sponsor community events or workshops focused on home maintenance to demonstrate your commitment to public health and safety, while simultaneously positioning yourself as a trusted resource.

Utilize social media platforms to connect with homeowners, sharing informative content that educates them about mold risks and preventive measures. Remember, building relationships is not merely transactional; it’s about cultivating trust within your community, which can lead to word-of-mouth referrals and long-lasting client relationships.

By actively engaging in your community, you will not only raise awareness of your business but also become a go-to expert in mold remediation.

Monitor and Adjust Your Strategies

To truly attract your first clients in the competitive field of mold remediation, it’s essential to continuously monitor and adjust your strategies. This means not only tracking the effectiveness of your marketing efforts—be it online ads, social media campaigns, or local networking events—but also staying attuned to emerging trends in the industry and changing client needs.

Examine customer feedback meticulously; it can provide invaluable insights. Are potential clients consistently asking about certain services or expressing concerns? Use that information to adapt your offerings.

Don’t be afraid to experiment with different approaches! Perhaps a referral program could incentivize word-of-mouth, or hosting an informational webinar might establish your authority in the field. The key here is flexibility—an agile mindset will allow you to pivot swiftly and capitalize on new opportunities, ensuring that your mold remediation business remains relevant and attractive to those seeking your expertise.

Conclusion

In conclusion, successfully attracting your first clients to your mold remediation business requires a strategic approach that encompasses building a strong online presence, leveraging word-of-mouth referrals, and establishing partnerships with related services, such as a reputable Mold Inspection Company. By focusing on customer education, showcasing your expertise, and providing exceptional service, you can differentiate yourself in this competitive market.

Remember, the foundation of your business lies in trust and reliability; as you build your reputation, your client base will grow, paving the way for long-term success in the mold remediation industry.