Professor Peter Goodson, Berkeley – Hass Business School and Retired Clayton, Dubilier & Rice Partner is speaking at SuperReturn Asia 2014, Hong Kong, 22-25 September. The following is a preview of Peter’s presentation on Day Two of the Main Conference, ‘Danger Signals Ahead for Asian PE Firms and It’s Not the Macro You Need to Be Worried About…A Must Do for GPs: Develop Business-Building Competency or Face Extinction’
Are we approaching a code red situation for GPs without operational capabilities in a crowded and competitive environment? Too much capital, in too few hands and targeting too short a list of tiny company’s spells trouble. Bad things happen when dry powder builds. Important regions are experiencing unexpected business cycles which dampen outlooks contrasted with pricey acquisition markets. Sponsors have struggled with exits. Growth equity (aka minority ownership) often seems to be a convenient excuse for GP passivity, but not easy to justify two and twenty fees when one can invest in a liquid passive fund ownership strategies for pennies.
In an environment where GPs are under the microscope, light touch strategies based on monitoring results that have already occurred coupled with hands off board participation are no longer sustainable.
Growth equity is no excuse for ‘spectatorship’. The new imperative for GPs is to be able to demonstrate that you are earning your two and twenty.
Most growth market businesses are under performing to potential and cry for help from grizzled and granular operating experience. The session will examine these questions through the lens of real world examples:
- How do local firm’s best build affordable and effective operating models?
- What are winning strategies to drive change when you are only a minority investor?
- How do you best record operational value attribution for LP’s to justify the two and twenty they pay you?
Download the conference programme and see the full speaker list at www.superreturnasia.com.
Peter Goodson is a pioneer in the private equity discipline as an early stage partner at Clayton, Dubilier & Rice. CD&R specializes in accomplishing significant operational improvements at companies like Hertz, Lexmark and Home Depot. Prior to his private equity career Mr. Goodson was the founder of Kidder, Peabody’s M&A practice. “Retired” he is an award winning MBA Professor at the University of California’s Berkeley – Haas Business School, Chairman of the Value Operations Board of Mekong Capital, a board member for the Tata Growth Fund and a fellow of Dartmouth’s’ Tuck Center for Private Equity.