Private equity firms are constantly looking for the certain thing because it is part of their culture. They’re not surprised they have been slow to embrace Digital Transformation. However, money is often conservative. This is a wake-up call to anyone involved in private equity: Digital Transformation must be taken seriously and made a part of your business.
Private equity must create value through acquisitions. This is obvious, and we are familiar with the most common strategies. Private equity firms would have acquired businesses in the past with the intention of growing them and possibly acquiring another. This would create greater value for both the companies. This would include creating efficiency in the new company by leveraging economies of scale, and improving sales, marketing, and operations practices.Digital Transformation Strategy
Digital Transformation is about creating greater efficiency and best practices, but not for the steam age. Private equity must realize that scale is not all about efficiency. From customer management systems (CMS), building robust ecommerce engines, and exploding brands, Digital Transformation can transform an undervalued business and smash the competition with just a little bit of digital vision.
Digital Transformation impacts all aspects of a company, and each aspect is another opportunity for private equity. Consider this: Private equity firms are always concerned about losing key employees following acquisitions. A well-executed Digital Transformation includes a clear digital vision that is delivered first to the company. It also considers how it can improve employee experience and maximize internal efficiency. This will impact morale and improve ROI.
Private equity firms are all wise to start a Digital Transformation within the four walls of their offices. It’s not enough to just beat your chest like a gorilla. You have to tear down the outdated doors in your own walls. Hedge funds may be computerized to determine the yin/yang, but private equity firms are not. How well do they manage their digital presence, their public digital profile and their leadership casting? Are they actively involved on social media? Do they offer opportunities for top talent to express their vision and grow their digital profile? Everybody in PE knows that a sharp suit is essential for making a first impression. Help your firm and your employees look sharp online.
These are just two examples of how Digital Transformation can impact the efficiency and culture in a company, before it addresses increasing revenues and new markets. Every PE company in the world needs to make Digital Transformation a part of their toolkit before they can be transformed.