Our recently sponsored webinar, as part of the IISE Global Performance Excellence series, featured Jared Frederici, an Industrial Engineer and Lean Six Sigma Master Black Belt, who as a Solutions Architect and Consultant has been practicing for over 10 years delivering sustainable value across most industries and within the Private Equity Sector.
The Industrial Engineering body of knowledge demonstrates a significant overlap with Private Equity (PE) strategies for value creation. This webinar summary highlights typical PE firm structures, explaining their approach to investing in targeted companies, performing due diligence, and aiming for value creation through streamlined operations.
PE firms typically adopt strategies that involve rigorous benchmarking and hedging risks across a diverse portfolio of companies, with similarities to managing a portfolio of projects like an Industrial Engineering or BPI leader would for an organization.
Industrial and Systems Engineering (ISE) skill sets align well with PE firms, particularly in value creation through operational improvements. As PE firms often deal with rapid timelines for acquisitions and value creation, this webinar emphasized the importance of speed in decision-making, drawing parallels with managing project portfolios. The need to enhance BPI timelines and execution efficiency was discussed, highlighting that ISEs should adopt faster decision-making and leverage data-driven strategies.
Key insights included understanding the financial structure of PE firms, including the roles of General Partners (GP) and Limited Partners (LP), and different financial and compensation strategies for the firm and their operational ramifications. Importance was placed on understanding valuation methodologies like:
Source: Corporate Financial Institute
Source: Tipalti
Source: Keiter
These valuation methods enable you to align initiatives with these financial frameworks to enhance collaboration when working with financial firms.
Jared also underscored the necessity for ISEs to develop financial acumen, especially in working capital and cash flow management, and to adapt their business cases to speak the financial language of PE firms. This involves focusing on metrics like EBITDA, operating margins and cash flow impacts.
Additionally, leveraging generative AI for rapid analysis and benchmarks was encouraged, given its critical role in enabling fast-paced decision-making akin to PE practices. The value of conducting ‘lessons learned’ and continuous benchmarking will help to to quickly refine processes and enhance offerings.
Finally, it was noted that ISEs can contribute significantly by implementing operational efficiencies that benefit cash flow and contribute to negotiating better financial terms, such as lower interest rates. This aligns with the overarching goal of enhancing company value, a critical criterion in PE ecosystems.
In conclusion, Industrial Engineers and BPI practitioners should embrace PE methodologies to drive faster, more impactful business process improvements across any industry.
Speed, financial acuity, risk mitigation & hedging, continuous benchmarking, and leveraging advanced technologies such as generative AI are no longer cutting edge, but now the new norm. As an Industrial and Systems Engineer, you should always look at lateral best practices from other industries to stay competitive in helping to propel your organization forward and demonstrate how ISEs rapidly create value.”
To obtain a copy of the powerpoint, or link to the webinar, please request through info@thepoiriergroup.comval
Our Industrial and Systems Engineers are Lean Six Sigma Black Belts who have the right skills and experience drawn from most industries. If you need help to advance your progress, dramatically improve your operations and align your priorities and initiatives to your strategic goals, let’s talk about your current challenges and how we can help.
