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Stax was proud to sponsor the Private Equity Forum in Boston, where our Global Practice Leader, Paul Edwards, joined a panel discussion to share his expertise on navigating deal sourcing, due diligence, and risk mitigation in today’s volatile market.
The panel, moderated by Neil Krauter Jr. of Risk Strategies, explored the evolving dynamics of deal sourcing and pricing, shifting due diligence priorities, and the critical risks investors face. Panelists included:
- George Cole, The Riverside Company
- Paul Edwards, Stax
- Blake Holman, HarbourVest Partners
The session provided actionable insights for private equity professionals, covering strategies to adapt sourcing approaches, prioritize due diligence, and strengthen risk mitigation to thrive in uncertain conditions.
Another panel discussion, “Portfolio Optimization & Value Creation: Tools and Strategies Leading Funds Use to Drive Growth in Portfolio Companies,” explored critical strategies and frameworks for enhancing portfolio performance. Panelists tackled essential questions designed to help investors frame assets effectively and drive value creation.
Alex Erines, Associate Director,
Stax Value Creation attended the Forum and shares his highlights and insights.
Market Overview
Today, value creation is instrumental in driving top-quartile performance. A discipline that once existed exclusively within the “hold” phase, is now relevant across the entire deal lifecycle. As a result, Deal and Operating partners are working increasingly hand-in-hand, and collectively emphasize profitable growth as the common north star guiding their priorities.
Five Key Value Creation Takeaways
1. Value Creation Moves Upstream in the Deal Lifecycle
For many PE firms, value creation has moved upstream in the deal lifecycle, with Deal and Operating Partners working together during the diligence process to establish a robust investment thesis. One speaker noted that their firm underwrites the value creation plan, not the company. Establishing a few key value creation hypotheses at this stage enables a more directed diligence process that can instill confidence in Investment Committee decision-making.
2. The Rise of In-House Portfolio Operations Teams
Organizationally, it is becoming increasingly common for PE firms to establish in-house portfolio operations teams with deep subject matter expertise in key functional areas (e.g., sales, pricing, marketing, etc.). These teams are action-oriented and highly collaborative with portfolio company management, and they seek partners who maintain a similar posture.
3. Go-to-Market Strategies as the Primary Value Driver in Growth Equity
In growth equity, go-to-market (GTM) is widely perceived as the primary value creation driver. Multiples valuations are not expected to return to 2021 levels, and GTM is an accessible and effective lever to drive profitable growth. Several firms emphasized customer segmentation and ideal customer profile (ICP) development as an important starting point as this informs all aspects of the commercial model.
4. AI as a Competitive Necessity in Private Equity
AI is ubiquitously top-of-mind, with widespread agreement that private equity firms must actively engage with it to stay competitive. As a newer, evolving technology, many firms are experimenting with how AI can be leveraged across their portfolio companies’ commercial functions (e.g., leveraging AI to review contract terms). Additionally, firms have started to include an assessment of a target asset’s AI capabilities during deal diligence.
5. Re-Diligence as a Key Lever During Extended Hold Periods
As the bid-ask spread between buyers and sellers results in expanded hold periods, conducting re-diligence is critical to identify new levers to accelerate profitable growth prior to sale. While “A” tier assets are still selling at high prices, there is a widened gap between these companies and “B” tier assets that require additional attention. Re-diligence can help to provide an actional roadmap of near-term opportunities as well as mid- to long-term opportunities available for the next buyer.
Conclusion
In conclusion, the PE Forum in Boston offered a comprehensive view of the challenges and opportunities facing the industry. Private equity professionals are placing significant emphasis on value creation to drive returns, and this trend is expected to continue in the coming years. In service of this, firms’ engagement models and methodologies are becoming more robust and sophisticated.
At Stax, our teams work collaboratively with management to help guide value creation from post-deal to pre-acquisition. Associate Director
Alex Erines specializes in working with our clients on
value creation strategies to maximize portfolio performance and create successful exits. To learn more about Alex or our expertise, visit
www.stax.com or
contact us directly.
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