Michael Teplitsky (top photo) is a vice president and
Duncan Bourne, CTP, is a managing director with
Wynnchurch Capital, a private equity investment
firm headquartered in Chicago. Teplitsky has
more than a decade of experience in private
equity investing and corporate finance involving
turnaround, corporate carve-outs, underperforming
companies, and restructurings. Bourne has more
than 30 years of experience in turnarounds,
financial restructurings, operational performance
improvement, and investing in special situations.
In addition to being a CTP, he is also a CIRA.
resources dedicated to the investments.
Turnaround practitioners are well-positioned to provide the critical
interim senior manpower needed both
to navigate the difficult first 100 days
of an acquisition and also in driving
operational performance improvement.
Turnaround practitioners who possess
the ability to drive real change in the
carved-out entity’s performance provide
significant value to investors in divested
businesses. Typical performance
improvement is focused on operating
strategy, core business systems,
operations performance improvement,
and revenue enhancement. And, as
mentioned earlier, a divestiture typically
adds complexity to human capital,
customer and supplier relationships,
back-office functions, IT systems,
and potentially to transition service
agreements (TSAs). Many successful
carve-outs and turnarounds benefit
from an introduction of advanced
business systems for strategy and for
management of employee development.
Goal Deployment, Voice of Customer,
Toyota Production System, Lean,
and the Management by Objective
process are a few examples.
The economy and deal activity are
both slow, and bankruptcy and
restructuring activity leaves a lot to be
desired. The outlook for an upturn in
restructurings is bleak, and any uptick
in activity is likely a long way off, as
the business cycle is still expanding.
Turnaround practitioners have the
skills and experience, forged in
distressed situations, applicable to a
wider ecosystem of services, broadly
defined as good old-fashioned, long-term stakeholder value creation.
Jensen presciently advocated in
1989 that the logical place to look
for value creation is in Corporate
America and that divesting noncore or
underperforming units hiding within
consolidated accounting segment
reports and/or overshadowed by a
frothy stock market is a key strategic
lever to unlock significant added value.
Jensen pointed out that private equity
firms are common buyers of noncore
assets, and this remains true today.
In public companies, activist
shareholders are increasingly serving
as catalysts for change, driving
carve-out strategies. The formula
to achieve successful outcomes
includes a three-way partnership
among a committed corporate
seller; an experienced in-house or
independent turnaround practitioner
to identify and execute performance
improvement strategies, including
carve-outs; and a private equity firm
with a track record of closing successful
corporate carve-out transactions. J
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