Match your vision. Mark Fields, former CEO of Ford Motor and current senior advisor at TPG Capital, said it “contains a specific lever for value creation with investors very clearly and in advance about value creation plans.” “It's really important to have a clear understanding of 'What is my mission?' ”
Field also recommended a boning-down of the types of questions investors are asking and how to ask them. “You're probably considering reporting about your business or making innovative investments through new adjacencies, so think about sprinkling it on.” These kinds of positive responses tell investors that “this CEO knows not only how to run the business, but also knows how to create value, but also knows that it's music to the ears of PE investors.”
Pascal Yammine, CEO of Pe-Backed Zilliant, recommends focusing on integrity. “We had a lot of changes to our investor team, which made it even more challenging. [our investor]we had ideas about how we were going to talk about our goals, where we were, where we needed to be. Finally, I created one slide, two boxes. 'Here's your choice. We can become this, or we can become it. Which focus is your investment perspective? “It's become very simple. And he was clear – he said, “I want it. That's what we're focusing on.” So every decision from there came to be a reminder, “This is the decision we chose, and here's why, here's what comes with it.” ”
Become a vigilant leader. Paul Aversano, managing director of Alvarez & Marsal Advisers, noted that common mistakes do not replace poor performance management when writing is on the wall. “When talking to our PE clients, their biggest mistakes and regrets are that if the deal was lying down, they didn't change management quickly enough,” he said.
Another error: Take your eyes off the ball as things are going well. “There's a level of self-satisfaction that creeps up,” Aversano said. “I force myself and my team to be even more vigilant when time is good. Be prepared unexpectedly.”
Diversify value levers. Aversano said over 50% of value creation over the past decade came from multiple expansions rather than operational improvements, but traditional PE models are less reliable. “We're looking at clients looking for ways to add value where they haven't seen historically,” he said, including ESG and digital transformation. “Finance engineering has been going through the roadside. Nowadays, companies are trying to overcome their multiple contractions and create value to overcome general business performance, inflation costs and more.”
That said, Mark Williams, CEO of Magna Legal Services, should make sure your focus is right for the cycle you are in. “If you're heading towards sales, we're focused on increasing EBITDA, monitoring costs, and making the business shine for sales. We're not starting a new initiative. But if there's something new in new investment, we'll need to invest in growth, launch new initiatives and focus on our team for the future.”
Be prepared to deal with it. Preparation is important as the PE industry is hampering the potential rise in M&A activities in 2025. Georgeta Precup, the managing partner of middle market PE company Aquitaine Capital and the operating partner of Albaron Partners, both were optimistic about the exit market and offered optimism about the expulsion market, noting that buyers and sellers would provide a more realistic outlook for future transactions. “The gap still exists, but it's going to be smaller,” Bloomfield said.
For CEOs preparing the exit, the recommendations were clear. Use your current lull to prepare, focus on profitability rather than growth at any cost, and ensure that your company's governance and technology infrastructure is healthy. “Make sure the numbers are neat and make sure the story is clean and defensible,” Bloomfield said.
Precup warned CEOs to continue to prepare for alternative outcomes. “What if the fees don't go down as expected? Let's prepare just in case.”
It will become transparent. Whether you provide bad news early or maintain clear communication throughout the investment cycle, trust is built on your willingness and willingness to share harsh truths. As Bloomfield briefly stated, “Don't bs.” Promoting a transparent relationship with sponsors will not only allow for better resource allocation, timely problem solving, and integrity of strategic goals, but also reduce the likelihood of sponsors panic if the business hits a pothole.
Especially in times of uncertainty, leaders need to engage in active conversations with investors on a regular basis. “The reason CEOs are really wrong is because when they hide bad news, it's like a snake in the grass,” Fields said. “It develops the mind when it becomes a much bigger problem that a company faces and erodes trust is a much bigger problem. And when that trust begins to erode, that's a problem.”
