Welcome back to The Private Equity Podcast, by Raw Selection! In this episode, our host, Alex Rawlings is joined by Marc Jourlait, a seasoned Private Equity Operating Partner with extensive experience as a former CEO, leading multiple successful exits. Marc shares his unique insights into the role of the Operating Partner, the importance of driving value creation early in the investment cycle, and why private equity firms must act quickly in their hold period.
Breakdown:
[00:00] Introduction of Marc Jourlait.
[01:36] Overview of Marc’s career journey, from Apple to private equity.
[02:03] Importance of acting quickly in the hold period to create value.
[03:00] Why replacing key personnel, like the CFO, is crucial early in the investment cycle.
[03:30] Causes of delay: risk management and decision-making dynamics in private equity.
[04:30] The importance of early involvement, even pre-close, to maximize value creation.
[04:59] Benefits of operating partners engaging with the management team before deal closure.
[05:49] How early engagement can lead to stronger value creation and faster exits.
[06:18] The operating partner model and its differences between the US and Europe.
[06:46] Riverside’s model of using former CEOs as generalist operating partners.
[07:37] Operating partners at Riverside: from acquisition to exit, staying engaged.
[08:05] Benefits of operating partners serving as board chairmen for governance and guidance.
[09:02] Shift in private equity from financial engineering to operational improvements.
[09:31] Importance of having a clear value creation roadmap from the start.
[10:01] The short five-year hold period in private equity requires fast action.
[11:00] European firms’ reluctance to invest in operating partners compared to the US.
[12:07] How value creation is now more focused on operational improvements over financial strategies.
[12:35] Key areas for value creation: pricing, operations, and cost management.
[13:04] How private equity firms create a clear story to maximize exit premiums.
[14:01] Discussion on employee ownership and its growing adoption in private equity.
[14:37] Riverside’s involvement with Ownership Works and its impact on employee ownership.
[15:07] How Ownership Works offers equity to all employees, driving engagement.
[16:12] Employee ownership as a catalyst for company success and value creation.
[17:57] Impact of employee ownership on engagement and business performance.
[20:14] Marc’s enthusiasm for the Ownership Works program and its positive transformation.
[22:13] Marc’s encouragement for more private equity firms to adopt employee ownership.
[22:41] Importance of employee ownership in driving engagement and maximizing value creation.
[24:04] Marc’s commitment to continuous learning and networking for professional growth.
[24:58] Marc invites listeners to connect with him on LinkedIn.
You can connect with Marc Jourlait on LinkedIn by visiting his profile here.
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The Private Equity Podcast, by Raw Selection