| Value acceleration: lessons from private-equity masters. | |
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MedLine Citation:
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PMID: 12048998 Owner: NLM Status: MEDLINE |
Abstract/OtherAbstract:
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The most successful private-equity firms regularly spearhead dramatic business transformations, creating exceptional returns for their investors. To understand how those firms do it, the authors studied more than 2,000 PE transactions over the past ten years and discovered that the top performers' success stems from the rigor with which they manage their businesses. This article describes the four management disciplines vital to the success of the best PE firms. First, for each business, they define an investment thesis: a brief, clear statement of how to make the business more valuable within three to five years. The thesis, which guides all actions by the company, usually focuses on growth. PE firms know that the demonstration of a path to strong growth produces the big returns on investment. Second, they don't measure too much. They zero in on a few financial indicators that most clearly reveal the business's progress in increasing its value. They watch cash more closely than earnings and tailor performance measures to each business, rather than imposing one set of measures across their entire portfolio. Third, they work their balance sheets, mining undervalued assets, turning fixed assets into sources of financing, and aggressively managing their physical capital. Last, they make the center the shareholder. Corporate staffs in PE firms make unsentimental investment decisions, buying and selling businesses when the price is right and bringing in new management when performance falters. These firms also keep their corporate centers extremely lean. By adopting these four disciplines, executives at public companies should be able to reap significantly greater returns from their own business units. |
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Authors:
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Paul Rogers; Tom Holland; Dan Haas |
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Publication Detail:
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Type: Journal Article |
Journal Detail:
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Title: Harvard business review Volume: 80 ISSN: 0017-8012 ISO Abbreviation: Harv Bus Rev Publication Date: 2002 Jun |
Date Detail:
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Created Date: 2002-06-06 Completed Date: 2002-06-19 Revised Date: - |
Medline Journal Info:
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Nlm Unique ID: 9875796 Medline TA: Harv Bus Rev Country: United States |
Other Details:
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Languages: eng Pagination: 94-101, 153 Citation Subset: H |
Affiliation:
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Bain & Company, London. |
Export Citation:
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APA/MLA Format Download EndNote Download BibTex |
| MeSH Terms | |
Descriptor/Qualifier:
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Consultants Financial Management / methods* Investments / economics, organization & administration* Organizational Objectives Planning Techniques Private Sector / economics* United States |
From MEDLINE®/PubMed®, a database of the U.S. National Library of Medicine
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