Top Takeaways from PE Insights Benelux, Amsterdam

We had the privilege of attending the PE Insights conference in Benelux, Amsterdam, last week. It was a pleasure to get to know more professionals in the industry and to hear firsthand what’s top of mind for PE leaders as we wrap up 2023 and look toward 2024. 

Not surprisingly, accelerating value creation continues to be the number one focus for the industry and a key topic on the conference agenda. What is surprising is how the approach to value creation is shifting.  From many of the panel discussions and our one-on-one conversations, it’s clear that it’s becoming increasingly difficult for PE firms to significantly improve their portfolio companies. In some cases, companies have been through the purchase and sales cycle a time or two before and the surface level improvements have already been made. In other cases, it’s simply a product of the current economic climate.

Whatever the reasons, PE leaders are signalling greater willingness to look beyond traditional value creation levers and dive deeper to unlock the full potential of their holdings. Here are four recurring themes we took away from our time in Amsterdam.

  1. More PE organisations are carving out niches or industry specialisations. While the PE industry is expanding with greater access to more companies in more industries, individual PE firms are beginning to specialise in specific segments of the market. Healthcare is a significant focus area as well as IT and high-tech companies. Other firms are segmenting by targeting woman-owned businesses or green businesses for example. This shift makes sense as the influence of PE grows, and firms need ways to narrow their focus and differentiate their expertise. It positions companies to gain greater insight into the foundational elements of the types of businesses in which they invest, paving the way to a deeper, more informed approach to value creation, continuous improvement, and breakthrough performance.

  2. PE companies are paying more attention to people and behaviour. As PE professionals look deeper into organisations for improvement and optimisation potential, they are taking a more hands-on approach to working with people at all levels. They are more purposefully investing in driving the sustainable behavioural and culture changes that underly breakthrough performance and position companies for major gains in value. Specifically, instead of focusing on fixing yesterday’s or today’s issues, PE leaders are putting resolutions in place for tomorrow. Looking forward to the exit scenario, they are considering how they can fundamentally transition the mentality of their portfolio companies to keep building on improvements throughout the holding period and beyond.

  3. Flexibility and agility are paramount to achieving results. PE firms can’t flex on the results they hope to achieve from their investments. But they can and should be open-minded when it comes to how they will drive those results. Being willing to step outside the comfort zone on everything from sales channels, to markets, to product uses ushers in new revenue and growth opportunities. Simultaneously testing out new approaches to supplier contracts, logistics, maintenance practises, and manufacturing processes introduces bottom line improvements and efficiencies. Both ultimately help portfolio companies achieve full value potential in a shorter timeframe.

  4. ESG issues are heavily influencing investment decisions. It’s becoming increasingly difficult to separate ESG from any meaningful discussion on value creation. As PE firms consider where to invest, it is clear they are keeping the sustainability and responsibility of those investments at the forefront of their decision making. Fortunately, ESG initiatives and value creation are very often tied at the hip. Efforts to reduce waste and resource consumption as well as those geared toward better working conditions and other social initiatives go hand-in-hand with reducing costs and instilling a more productivity-oriented culture, driving value in the right direction.

We couldn’t agree with the consensus more.

Overall, we’re inspired by what we heard in Amsterdam. As the PE industry embraces a deeper dive into portfolio companies and momentum mounts for a more hands-on approach to people and process improvements, we believe PE professionals will unlock entirely new dimensions to value creation. We’re excited to see these trends play out over the coming months, elevating the return on PE investments to even greater levels.

In the meantime, if you’re ready to talk about how your firm can embrace the latest trends in value creation, reach out to André Smaal at TBM Consulting Europe.