This story appears in full in the July/August issue of Middle Market Growth.
Sometimes sharing can be good business.
As private equity firms maximize the value of investments, they look for ways to help portfolio companies operate more effectively and efficiently. To that end, some firms encourage portfolio companies to help each other overcome business challenges, a process that entails creating ample opportunities to discuss company problems and solutions. When firms make best-practice sharing a high priority, they can spur portfolio company improvement in areas such as human resources, technology, employee productivity and workplace culture.
“We’re constantly looking at ways that we can pollinate between our portfolio companies,” says Peggy Roberts, COO of the Riverside Capital Appreciation Fund for The Riverside Company, a private equity fund focused on the middle market. “If our operating team is working with one company where they see something good happening, they are little bees that take it from one flower to another and help make sure it gets deployed into the next company.”
One of the most effective ways Riverside spreads best practices is by encouraging direct communication between portfolio companies. “The richness of the learning comes from the peers,” says Roberts, who notes the firm spends a lot of time and money organizing portfolio company events.
An example is its annual human resources forum, where representatives from the companies exchange lessons learned on issues such as employee retention and compensation. That sharing is particularly useful, considering human resources departments are often under-resourced in middle-market companies. At an HR forum a few years ago, one Riverside portfolio company discussed the hiring portal it had built to streamline employee applications and screening. That gave the other companies some ideas for building their own effective hiring portal, Roberts says …