Richard Sanders spoke with Xhulio Ismalaj from Real Deals on the rise of restructuring as a strategy to reset various fund managers’ portfolio companies through a difficult growth environment.

The article explores the ways different private equity owners are restructuring assets that have not come to market due to the last few years of turbulent macroeconomic conditions. Richard outlines why cost-based restructuring is highly likely to increase in 2024 as an initial fix, now that some asset managers’ patience is wearing thin.

At Sullivan Street Partners, we’ve always been a long-term investor that can expertly navigate complex deals, so it was a pleasure to reflect on our experience and share our insights with Real Deals alongside Ivo Hobson from Mutares SE & Co. KGaA, and Interpath Advisory‘s Richard Harrison, David Pike, and James Fagan.

Read the full article here: https://lnkd.in/exVbgMxG

Richard Sanders has shared his foresight on sector expectations in Actum Group’s UK Private Equity 2024 outlook.

With our sector-agnostic perspective, Richard comments on the industries that he anticipates will perform well in 2024, highlighting that Sullivan Street Partners has observed strong deal flow in asset heavy businesses, engineering, and healthcare. He also considers the reasons for this performance, namely that owners are wanting to derisk after facing losses during the pandemic.

We are seeing many situations where an operations-led approach is key to helping vendors and future management teams. As investors with comprehensive experience dealing with complex and operationally-intensive situations, we look forward to the opportunities that 2024 will bring.

As always, we enjoyed having the opportunity to share our market perspectives with Reporter Paul Francis-Grey and to be part of a wider discussion alongside Jamie Roberts from YFM Equity Partners, ECI Partners ’ Tom Wrenn, Peter Barkley from WestBridge, and RSM UK’s Jasper van Heesch.

Read the full report here: 2024 UK Private Equity Outlook | Actum Group 

Sullivan Street Partners‘ Richard Sanders recently spoke about one of our flagship portfolio companies Octavius Infrastructure with Paul Francis-Grey from Actum Group.
 
The article focuses on the infrastructure sector, namely Octavius’ journey since acquisition, and its ongoing partnership with Sullivan Street. Richard shares his outlook on the construction sector and how it’s proving to be a challenging area for private equity to navigate. Despite this, he outlines Octavius’ successes in winning new contracts that are supporting Network Rail and National Highways projects, as well as its most recent bolt-on acquisitions of R&W and Navitas Engineering Ltd.
 
As long-term investors, we’re excited to continue being part of Octavius’ journey in welcoming new acquisitions into the group, mobilising new contracts, and delivering several internal improvement projects.
 
It’s always a pleasure catching up with Paul from Actum Group to discuss our various avenues for value creation and sharing updates on our portfolio companies.
 
Read the full article here: https://lnkd.in/edHsr3vm

Our approach to the triple bottom line: Across all companies in the Sullivan Street Partners portfolio, we require a sustainable and well-balanced approach to company strategy. Language nuances change depending on the sector and the organisation we inherit at acquisition, but the goal always remains the same: drive growth that positively impacts the interconnected triple bottom line of people, profit, and the planet.

Richard Sanders, Managing Partner and Co-Founder, shares: “I’ve faced many questions about how to make sustainable goals work, and how to strike the balance between generating profits and doing the right thing. The truth is, for the vast majority of businesses, there is significant scope to improve operations whilst also driving positive impact for people, profit, and the planet. We don’t think about them in separate buckets, but rather as a comprehensive package.”

The Wave, one of Sullivan Street’s flagship portfolio companies, was founded with the use of the triple bottom line. The company prioritised the development of a solar farm on site, ahead of the energy crisis, which has reaped significant financial benefits. During our partnership, we’ve modified customer service duties to combine positive social impact with sales responsibilities, finding common processes to make both more effective. These successes and improvements demonstrate how this set-up is an effective and simple means of ensuring balanced considerations in decision making and informing company strategy.

As stewards of our companies, we comprehensively review environmental, employee, and financial performance to develop bespoke plans for change. We consider all stakeholders in these interventions and state the impacts holistically so that, together with management, we can make informed decisions. This takes no longer than a narrow focus on profit and is simply a mindset shift.

Sullivan Street Partners‘ Zeina Bain took part in Real Deals‘ Special Situation Roundtable hosted at Six Park Place.

The roundtable discussion explored what to expect in this segment of the market in 2024 in terms of investor appetite, deal dynamics, and management approach. Whilst discussing the headwinds that businesses are faced with, we examined the possibilities these might create in the special situations space – ranging from scope for value creation, the need for more proactive ownership, and the new investment opportunities that may arise.

As investors focused on complex or operationally-involved situations, this was a great opportunity to draw on our experience working with management teams across businesses facing different challenges, and to hear what our peers are doing in this space during this eventful time.

It was a pleasure taking part in such a thought-provoking conversation alongside other sector specialists Jat Bains from Macfarlanes, Alchemy Partners ’ Thomas Boszko, Alex Cadwallader from Leonard Curtis, Tom Callaghan from Endless LLP, AURELIUS’ Tristan Nagler, and Ridgeway Capital Llp’s Ari Stavropoulos. Many thanks to Alice Murray, Taku Dzimwasha, and the Real Deals events team for organising this insightful roundtable discussion!

Read the key takeaways here: https://lnkd.in/gEZV2m5f

Our approach to bolt-ons: At Sullivan Street Partners, we believe that good integration comes from a good acquisition process. Too often, bolt-on acquisitions are treated as a mathematical and mechanical means of growing an existing portfolio company. However, at Sullivan Street, we treat bolt-ons as individual organisations, with much more to bring to the culture and operations of our portfolio company, rather than simply a vehicle for expansion.

When considering a company’s future and accompanying strategy plans, we consider the acquisition’s ethos, culture, people, and the elements it aims to preserve. We do this by having candid conversations with any new business to understand its operational strategy, as well as what the company is hoping to achieve.

Once we have successfully identified the growth strategies of both enterprises, we can then consider how to bring the two entities together. We rely first and foremost on the management teams of our portfolio companies to achieve this – we only ever embark on a bolt-on strategy once we have full confidence in said team. Beyond that, we depend on our forward-looking, pragmatic, and operational approach to help us advise management on which services should retain their differences, and which should be merged.

Layton Tamberlin, Managing Partner and Co-Founder said: “At Sullivan Street, we work with businesses with whom we truly resonate. It is of the utmost importance to honour the original management team’s hard work and retain its high-calibre staff. We do so by considering operational realities throughout the process, and by doing our best to preserve the qualities that initially attracted us to the company. Similarly, we would always advise sellers to fully grasp their buyer’s understanding of the company – to guarantee that they appreciate and respect the company’s core mission.”

Our approach to test and learn: At Sullivan Street Partners, we operate on the belief that the simplest way to achieve continuous improvement is to always try new methods of working. Bringing about meaningful improvement involves attempting to make a change, gathering feedback, diagnosing the impacts, and learning from this process.

For many of the companies we are involved in, something has halted the learning process prior to being brought into the Sullivan Street fold. From our experience, breaks in the learning cycle can be caused by complex company structures, poor role definitions, a lack of ambition, an overbearing parent organisation, or insufficient funds; all these potential causes are often compounded by difficulties in the marketplace or a disconnect with clients.

Richard Sanders, Managing Partner and Co-Founder: “Anyone attempting to make proactive and ongoing change within any company, first needs to establish a test and learn mindset. It goes back to a very simple concept that we all learn through experiment and feedback.”

KPIs and performance culture are terms often referenced by private equity, consultants, and businesses in driving value creation, but the language of metrics can be off-putting. Test and learn is more human and natural than any report a dashboard could provide. Experimenting and learning from the results is essential. Sometimes things work, and sometimes they don’t – the real failure is not trying or ignoring the impacts when you do.

Sullivan Street Partners is pleased to announce the bolt-on acquisition of R&W by its portfolio company Octavius Infrastructure Limited.

Civil engineering contractor R&W specialises in highway and civil engineering services. R&W has always been an attractive business to Octavius due to its complementary culture, service, and capabilities, making it a natural fit to bring into the Octavius fold. This partnership marks a milestone for both companies and reinforces Octavius’ commitment to growth and market leadership.
 
We look forward to seeing how Octavius will integrate R&W into the business in the coming weeks.

Our approach to pricing risk: Some of the biggest challenges in the industry are around assessing risk and pricing it appropriately, if at all! Some assets are cheap for a reason and some carry binary risk where the outcome is so unpredictable that it takes either a conviction view or leave of your senses to make the investment. At Sullivan Street Partners, we believe that every challenge can be priced adequately if the key factors are understood as well as potential opportunities, risks, and mitigants being sufficiently balanced. Well, almost every challenge…

Investors commonly back a central base case that they have convinced themselves of, following input from management, various diligence advisers, and experts. In reality, these cases are rarely correct, because any forecast case is rarely correct. 

Zeina Bain, Managing Partner: “We are somewhat more fluid and conviction-led in assessing an investment. We consider what can go right, what it takes to get there, who can make it happen, and the extent of possibilities. We then compare that to what could go wrong, the potential gaps in the organisation, and its capabilities, positioning as well as its processes and systems. The next question is – do those inputs and outputs add up to an opportunity to make an exciting return for our investors? Are there sufficient mitigating or offsetting opportunities to those negative factors to still produce an attractive investment?”

As operationally-minded investors, we see performance as the aggregation of daily actions and decisions. The key consideration is whether they can be pointed in the right direction and adapt constructively to their environment.

At Sullivan Street Partners, we are committed to always ‘pricing the risk’ when approaching situations. “Rather than shying away from the potential challenges – we lean into assessing them – be that end market headwinds, operational complexity, opaque financials, legacy liabilities, or similar.” We quickly prioritise the key issues and concerns while figuring out the upside potential. We take a conviction view thanks to our extensive experience engaging with similar situations as well as applying both operational and financial perspectives.

We believe there is always a deal that can be done in any situation and will always back ourselves when navigating these circumstances – no matter how complex.

Sullivan Street Partners is very pleased to announce the bolt-on acquisition of Greenfingers Group by its portfolio company Tivoli Group Limited.

Greenfingers is a leading provider of ground maintenance and horticultural services across the UK and specialises in creating and maintaining outdoor spaces.

This partnership is in alignment with Tivoli Group’s growth and expansion strategy and, by integrating Greenfingers’ extensive range of grounds maintenance machinery and trained staff to the Tivoli Group team, the group continues to establish itself as one of the nation’s leading landscape companies.

Our approach to rewards and compensation: Sullivan Street Partners‘ operating model is centred around the dedicated employees and management of the companies brought into our portfolios. With growth at the heart of our transformation mission, we believe that providing appropriate rewards and compensation are an inextricable part of our commitment to the teams we work alongside.

Layton Tamberlin Managing Partner and Co-Founder: “Growth should be good for everyone in the business. We want to reward the employees who choose to stay on and trust in our stewardship. It is essential we give well-benchmarked salaries for all as well as meaningful potential rewards. Therefore, some roles are given bonuses each year whilst others receive long-term incentive plans.”

With the transformation of a business comes ensuring that employee retention rates are high. It is pertinent that companies are provided with the right tools to handle the transition seamlessly and feel valued in their new working environment. “We are passionate about incentivising our portfolio company employees. We want them to feel motivated about contributing to its long-term success upon acquisition. One of the ways we do this is by putting in place LTIP plans. These compensation plans allow companies to reward employees, both for their loyalty to the company and their performance during that period.”
 
LTIP plans typically involve granting employees a bonus accrued over several years, based on company performance, or growth equity that vests over a multi-year period. They are crafted in a way that aligns the interests of employees with its company’s shareholders. Typically, these plans are given as rewards to management or senior leadership members. They are aimed at driving employee engagement by giving the team an incentive scheme and targets over a forecast period, so that they can adapt to the transitioning of the company structure. 

Sullivan Street Partners is proud to share that it has acquired Johnson Matthey’s diagnostics solution business, Tracerco. The business provides specialised detection solutions, and operates in 16 countries, using innovative nucleonics and chemical tracing technologies developed in the UK. This £55m deal is the firm’s biggest carve-out to date.

Given our focus on innovation, we look forward to working alongside Tracerco’s team to apply our transformative operational insights to their current strategy, whilst helping them continue to develop their historically innovative business.

Our approach to data and reporting: Sullivan Street Partners is focused on creating change-oriented growth businesses. The type of acquired company varies significantly and the cultures and recent stories of those businesses are also wide-ranging. However, there are some basics that form a necessary foundation for any Sullivan Street business and must be implemented early to be able to move forwards.

Richard Sanders, Managing Partner and Co-Founder: “Information is often talked about in terms of deep data analytics and data insight. It’s hard to deny that such a level of reporting and insight is critical, but often there is an underlying lack of information for decision makers across a company which restricts flexibility. Many of the companies we have acquired have not shared margin levels for services and have kept profit and loss data to just the board; meaning that everyone else is guessing how to make a difference to performance.”

Sullivan Street’s approach to creating successful transformations comes from understanding each business from a deep operational perspective. We know how to work within a company and how to make change happen. As a result, we focus on the essentials that make a good business and don’t stop until those building blocks are in place.

Transparency and trust are key to any major change programme and also lead to better work environments and much more pleasant days of work. “I have seen managers and staff come alive when given the most basic information to allow them to do their job. Many people will do the best thing for the business if given the right feedback. Enabling other people’s development and decision making is one of the most fulfilling and sustainable ways of improving performance.”

Sullivan Street Partners‘ Richard Sanders recently spoke with Alex Demas from Actum Group to discuss one of the company’s flagship portfolio companies The Wave.

In his interview with Alex, Richard goes into detail on the firm’s strategy with The Wave to demonstrate how Sullivan Street creates value. He outlines the expansion plan for the inland surf park, how they are working with management on marketing and capital expenditure to get there, and their continued focus on the social impact of The Wave.

Read more about The Wave and Richard’s insights here: https://lnkd.in/ebaahyz3

In honour of International Women’s Day last week, Sullivan Street Partners‘ Zeina Bain met with Craig McGlashan from PE Hub Europe to discuss her career and experience in the private equity industry.

Zeina began her career in investment banking and went on to spend a considerable 18 years at The Carlyle Group, before transitioning to Intermediate Capital Group (ICG) and now Sullivan Street Partners. Zeina describes the challenges she has encountered in the PE world as well as what excites her about the industry. She shares the nuggets of wisdom she’s collected over her impressive career – from putting yourself out there to talking to industry peers when in need of reassurance.

Read more about Zeina’s career and what she’s currently working on at Sullivan Street: https://lnkd.in/eezFBS3e

Our approach to carve-outs: Sullivan Street Partners is proficient in effective execution when it comes to carve-outs. Four out of seven of our large deals to date have included carving out a division, separating the organisation and building new support functions. We have internal and external teams that really understand the pace of change, urgency, and determination that is needed to deliver a successful carve-out.

Richard Sanders, Managing Partner and Co-Founder: “Once you have understood the business and spoken with the leaders and employees that are about to be affected, it becomes clear where a carve-out needs to make change and where it needs to recreate what was already there. The distinction between recreating the existing parts and attempting new change is critical. We ensure that well-meaning suggestions for small improvements do not interfere with the wider transition. This is key because you are changing multiple systems and processes, as well as affecting hundreds of peoples’ jobs; you cannot afford to introduce non-essential complexity to the process.”

Sullivan Street’s approach to performing a successful carve-out comes from understanding each business from a deep operational perspective. We’re able to solely focus on the firm’s key processes and by doing so can simplify the separation process. Ultimately our goal is to ensure continuity for the company’s core business. Improvements can happen later.

A clear roadmap with achievable timescales is essential, as is resilience in the face of new challenges. However, above all else, trust between Sullivan Street, the change team, management, and staff drives the success of a carveout. Strong bonds of trust ensure that nothing falls between the cracks and that together you deliver a step change towards independence; a change process that is often the biggest many will face in their entire careers.

Sullivan Street Partners is proud to announce the appointment of Zeina Bain as Managing Partner.

Joining alongside Founding Partners Layton Tamberlin and Richard Sanders, Zeina has built her impressive career in the private equity industry, most notably in her role as Managing Director at The Carlyle Group and ICG. Her extensive experience will continue to drive Sullivan Street’s long-standing track record of delivering outsized returns. She brings not only investment expertise, but also a passion for transformative and operational change within portfolio companies, through proactive partnership with management.

We very much look forward to the future of the firm with Zeina on board.

Read more about Zeina’s arrival in today’s exclusive interview with Jennifer Forrest from Real Deals here: https://realdeals.eu.com/article/sullivan-street-partners-hires-zeina-bain-as-managing-partner