Driving profitable growth – Viewpoint by James Painter, Palatine
Driving profitable growth is the cornerstone of every PE firm.
At Palatine, creating lasting value in the businesses we back underpins all that we do.
It helps us support sustainable growth and generate the strong returns our investors expect. While every investor will have its own approach and know what works best for them, the mindset at Palatine, which we bring to every investment, is based on positivity, ambition, vision and genuine partnership.
There are a number of ways we go about driving profitable growth – all our portfolio companies must embrace ESG, but we also look at strategic M&A, Buy and Build, and
deploy multiple other levers ranging from digitalisation to investing in a company’s sales function or implementing a new IT system to drive efficiencies.
As a B Corp ourselves, sustainability is a cornerstone of our investment approach. Over the last 15 years we’ve worked with management teams to help them run their businesses in the right way for the long term – even after we’ve exited.
While there is never a ‘one size fits all” approach, at investment we always look at where we want to get to at exit, so setting a shared vision with the management team is important from the outset.
The investment I led last year into Bluprintx, the Liverpool-based tech services provider, is a good example. Here, we see an opportunity to create a global business of scale, providing strategic digital transformation in marketing, sales and customer service. The ambition is to triple the size of the business over our investment period.
The ‘how’ we achieve this is the key thing. With Bluprintx this will be through investment in the business and its people to drive organic growth as well as by strategic M&A.
When I think about what makes M&A strategic, the important point is that it is bringing capabilities to the group that add to the vision at exit.
Not all acquisitive strategies are the same. In some instances, there will be the need for a Buy and Build approach for scale – as is the case with current portfolio company BK Plus. Prior to making an investment we work with management teams to create a Strategic Growth Plan. This looks at the growth levers available to a business and focuses in on those
that are going to contribute greatest to the shared vision we set out.
The businesses we back are in high growth sectors with strong management teams and so there are always numerous opportunities available to them. It is however important to be selective and focused. Then, once the plan is agreed, it’s about ensuring the whole organisation is aligned to these objectives and building KPIs and data to track progress. Experience has taught us that sometimes you need to adjust, pivot or change the plan, and this is always a collective process with management.
To drive profitable growth, I think you have to not only be agile, but forward- looking in your approach. Sometimes it’s about helping management teams to recognise that what they have done to get the business to where it is today, won’t necessarily get it to where we all want it to be in four years– and this is where a partner like Palatine can help.
At Palatine we talk about “positive equity” and I think this is about living up to our culture, values and mindset of forging genuine and trusted partnerships with management teams with a common goal of creating sustainable profitable growth, and doing business the right way.
