May 20, 2022 • 24 mins
Value creation is the foundation of business. It is what sets you apart from the competition, secures long-term customers, and provides your brand and solution a distinct meaning. Your unique product will be considered as just another commodity by your target market until you build value for it. In order to create value for your product, you must first understand what value means to your target market. What are their needs and wants? How can your product improve their lives? Once you have a clear understanding of your target market's needs, you can begin to formulate a value proposition that will resonate with them. Only then will you be able to set your product apart from the competition and secure the loyalty of long-term customers.
In this podcast, Kit welcomes his guests Chris Longiaru, COO at Acclaro Growth Partners, Beth Hattel, a partner at Acclaro Growth Partners and Josh Present, a principal also in Acclaro Growth Partners. They discuss what Value Creation means and how it is important when we start growing our business.
If you're interested in learning more about organic growth, growth by acquisition, or the increase of capitalization of your company, this will be interesting and useful for you.
Key Takeaways
What is Value Creation
Where Does Value Creation Fit in the Market
Why Clients and Business Owners Ask for Help in Adding Value
Takeaways and Lessons Shared From Our Guest
Quotes
“Overcoming the hurdles in processing your products and understanding your competitions within the market as best as possible is what I can say value creation” - Chris
“Because the best plan for one entity may not be the best strategy for another. And I suppose the quick answer to where it adds value is our ability to kind of put those things together and develop a strategy that works best for them.” - Beth
“Coming from my experience,I tend to view more looking at the inward as ultimately affecting the outward end around how people build trust” - Josh
Featured in this Episode
Christopher Lisle
Growth strategy advisor for the ecosystem of investors, IBanks and the companies they work with (middle market).
Acclaropartners.com
Chris Longiaru
COO | VP, Operations
Acclaropartners.com
Beth Hattel
Market Strategy Professional | Partner at Acclaro Growth Partners
Acclaropartners.com
Joshua Present
Principal at Acclaro Growth Partners
Acclaropartners.com
Chapters
[00:00] Introduction
[02:12] Chris’ Background
[03:06] Josh’s Background
[03:51] Beth’s Background
[05:10] Where Does Value Creation Fit in the Grand Scheme?
[05:59] What Does Value Creation Mean?
[11:50] What Causes Clients to Ask for Help?
[18:35] How Does This Process Take Time?
[19:12] Words of Wisdom from Our Guests
[22:49] Conclusion and Outro
This podcast was produced by Heartcast Media.
In this podcast, Kit welcomes his guests Chris Longiaru, COO at Acclaro Growth Partners, Beth Hattel, a partner at Acclaro Growth Partners and Josh Present, a principal also in Acclaro Growth Partners. They discuss what Value Creation means and how it is important when we start growing our business.
If you're interested in learning more about organic growth, growth by acquisition, or the increase of capitalization of your company, this will be interesting and useful for you.
Key Takeaways
What is Value Creation
Where Does Value Creation Fit in the Market
Why Clients and Business Owners Ask for Help in Adding Value
Takeaways and Lessons Shared From Our Guest
Quotes
“Overcoming the hurdles in processing your products and understanding your competitions within the market as best as possible is what I can say value creation” - Chris
“Because the best plan for one entity may not be the best strategy for another. And I suppose the quick answer to where it adds value is our ability to kind of put those things together and develop a strategy that works best for them.” - Beth
“Coming from my experience,I tend to view more looking at the inward as ultimately affecting the outward end around how people build trust” - Josh
Featured in this Episode
Christopher Lisle
Growth strategy advisor for the ecosystem of investors, IBanks and the companies they work with (middle market).
Acclaropartners.com
Chris Longiaru
COO | VP, Operations
Acclaropartners.com
Beth Hattel
Market Strategy Professional | Partner at Acclaro Growth Partners
Acclaropartners.com
Joshua Present
Principal at Acclaro Growth Partners
Acclaropartners.com
Chapters
[00:00] Introduction
[02:12] Chris’ Background
[03:06] Josh’s Background
[03:51] Beth’s Background
[05:10] Where Does Value Creation Fit in the Grand Scheme?
[05:59] What Does Value Creation Mean?
[11:50] What Causes Clients to Ask for Help?
[18:35] How Does This Process Take Time?
[19:12] Words of Wisdom from Our Guests
[22:49] Conclusion and Outro
This podcast was produced by Heartcast Media.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:09):
Welcome to Strategic Growth Council podcast aboutstrategic growth and mergers and acquisitions for the
middle market. I'm kit Lyle,your host, and if you're interested in
learning more about organic growth, growthby acquisition or the sale of your company,
this show will be interesting or usefulfor you. And if the guests
(00:31):
today do a good job, itmight be equal parts interesting and useful.
I'm kidding. Thanks to our sponsorsa Claro Growth Partners, a strategy consulting
firms serving middle market M and A. Visit a Claropartners dot com. And
our second sponsor, of course,is Strategic Growth Counsel the Peer Advisory Council
(00:54):
slash Virtual Roundtable slash Mastermind group forsee your executives and business owners contemplating acquisition,
sale, or strategic growth. StrategicGrowth Council collaborates with participants in the
M and A ecosystem such as privateequity groups, lenders, ibanks, and
service providers making M and A happen. Visit Strategic Growth Council dot com to
(01:21):
learn more. All right, thatwas a long intro. Every episode I
interview an expert or a handful ofexperts, or a participant in the world
of Strategy Growth or M and A, and today I am joined by none
other than our sponsors at a ClaroGrowth Partners, or three of them anyway,
Josh Present, Beth Hattle, andChris Lanerou. Welcome, Thanks for
(01:46):
having us, Kid, thank you, thanks for being here. I know
you just had a engaging meeting andyou're just coming from one meeting to the
next. Sometimes it's hard to tosplice things up a bit, but I'm
glad you're here, Glad you madeit just in the nick of time.
(02:07):
Let's have a minute's background on eachof you, and we'll start with Chris
Launeru. So for those of youthat have seen this before, you don't
want to hear about me twice,but I basically ran the path of almost
everybody that you've seen an M andA from investment banking onto private equity and
now I'm the CEO here at AClara. So I'll do something a little
(02:29):
more personal, which is when I'mnot sitting at my desk, which is
almost always, I am glued tothe TV watching the New York Rangers,
and so I hope there's a lotof Ranger fans watching this. They're not
no I'm just kidding. Thanks Chris, Thanks for joining. Chris mentioned for
(02:50):
those of you who've seen him beforeheard him before, he was on a
previous podcast in which we talked aboutwhat was it self side or was it
by self side by side? Okay, and Josh present, Welcome, thanks
for joining. It's good to behere, Thanks for having me. I
a relative newbie to a Claro.I came here because I was very interested
(03:13):
in working with a smaller group ofpartners and ultimately helping to build out the
risk practice. My background is primarilyand incorporate investigative due diligence. I've worked
closely with private equity firms, hedgefunds, i'd be investment banks, and
outside counsel over the years in thedeal space across the spectrum, both by
(03:35):
side and sell side and integration.So I am looking forward to talking to
everybody today. All right, thankyou, Josh. And Beth, whose
last name I've been told rhymes withbattle. Beth Haddle Welcome, thank you
for being here, Thanks for havingme. My name is Beth Haddle.
I am a partner also at aClaro. My backgrounds in market strategy,
(03:58):
distributed systems, primarily navigating channels orroutes to market, because there's channels pretty
much everywhere. I've worked as aconsultant and in industry with companies of all
sizes, various sectors. I knowa lot of seemingly random things about industries
that most people don't get to talkto. I believe, as my colleagues
(04:23):
have heard me say, that theanswers in the market and often business success
is credit kid, and more onwhat you do in the market than your
service or your product or your marketcondition. All right, Well, as
Chris mentioned a moment ago, he'sbeen on the show before talking about the
buy side and the cell side,and we're today, we're we're gonna be
(04:44):
talking about something different. We're gonnabe talking about kind of that vast middle
ground of a whole period of aprivate equity group that we refer to as
value creation. But but but first, and Chris, I'll turn to you.
You know, where does value creationfit into the grand scheme of services
that a Claro offers? Did Idescribe it? Well, it sort of
(05:06):
bookended and it's stuck in the middle. Yeah. So, um, it
is a significant portion of our business, but one of the smaller. So
you know, kit Kit mentioned.You know, we've talked about cell side
when you're selling a business and buyside when you're buying a business, and
the diligence associated with that. Forus, that's a majority of what we
do. But for a business owner, most of the time is actually spent
(05:30):
owning it, right. And whenyou're owning it, what you're trying to
do is you're trying to grow it, and there's a lot of different questions
and studies and things to work onthat are associated with that. So that
portion of our business is probably abouttwenty to okay, and the other the
other two service areas are market orcommercial due diligence and sell side market studies.
(05:58):
Okay, all right, So yeah, what does value creation mean?
And I've been trying to think ofa context for this myself, you know,
because when you're trying to increase thevaluation of a portfolio company, and
there's a lot going on, right, there's equal parts art and science,
(06:18):
and I guess, you know,as I boil it down to the lowest
common like simplest level for me towrap my head around, I think of
Harold and Kumar or Cheech and Chong. Right, So what if what if
their task is to grow a littlepot seedling, you know, a little
cannabis. They've got a private equityfund called Harold and Kumar Capital, and
(06:43):
they're growing weed in some grow room, and they've got a grow light,
and they've got like a drip ofirrigation, and they've figured out the right
concoction of potassium and nitrogen and fertilizerand dirt and so forth. That's just
plain science, right. It's realeasy because all you have to do is
get the get the proportions right.But if you turn that into a true
(07:09):
business and you're needing to grow thatbusiness, there's a lot of other stuff
going on, right, So maybemaybe my analogy was not so good.
But my point is there's a lotof complexity. So what what what what
is value creation? Um? Well, I think Beth is probably going to
have the best answer to this.Um, So I'll say something not as
(07:31):
eloquently and then I'll ask Beth tofix what I said. But um,
you know, so get in yourexample. You know you're talking about,
um, the creation of a product. But there's always a more efficient way
to either create the product, distributethe product, market the product. There's
(07:54):
going to be hurdles to overcome.There's going to be other competitors doing things,
you know, in that market withthe same products, Right, There's
going to be bigger entities and smallerentities competing in different ways in different regions.
So understanding those and navigating those asbest as possible right within a market
(08:15):
is value creation. Um. Andyou know, Beth, Josh, you
know, I don't know what Ileft out, but I'm sure that you
do. Yeah, well, Iguess I would say a couple of things.
One is you talk about growth,which is always the goal, right,
but I think sometimes we have toreally think about what makes profitable growth
and profitable growth And I started tosay this at the beginning, is sort
(08:39):
of about what you do in themarket and understanding and navigating what those things
are as really critical for value creationbecause you can you can sell a lot
of something and not necessarily have profitablegrowth. And I think the key to
making those plans and understanding and youknow, there's there's strategy and there's tactics,
and the harmony of those two thingsreally are what goes on in the
(09:01):
market, what's going on in thecompetitive space, what's going on internally that
allows you to respond and understand,um, the requirements out there and how
things are changing. I mean it'sreally um where we where we at a
value is when people are out there. You know, our clients are busy
run into business and so they don'talways have time to figure out what's going
(09:22):
on in the market and then howto therefore use their strengths the best way,
right, because the right strategy forfor one entity is not necessarily the
right strategy for another. And ourability to kind of pull those things together
and make a plan that works bestfor them. That's really I guess the
law and short answer of value whichyou know where where it adds value to
(09:45):
Tom what you're describing portfolio company.Yeah, so let's sort of summarize briefly
and then maybe Josh has something toadd. This is uh is science,
but it's also art. In otherwords, there's a lot of nuance and
prioritization and sort of where do wefocus to it. And then in addition
(10:07):
to that, there's internal versus external, and my understanding is that you all
would focus more, you know,less on you know, human capital or
the manufacturing value strategies, or operationalissues or IT issues and look more at
the external. Chris, you talkedabout brand and competition, and you know
(10:31):
there's channels, etcetera, etcetera.So any anything to add to what I
just said, Josh or would youdisagree with anything I just said? No,
I think they both got it spoton, coming from from different perspectives.
I mean, night if you hadto ask me also, I probably
have a completely even I wouldn't saydifferent perspective of maybe a different view on
even more how to create value.And I think for me, just kind
(10:52):
of coming from my experience, it'sI tend to view more looking at the
inward as ultimately affecting the outward andaround how people build trust. And to
think of some of just some ofthe organizations that we've worked with recently,
they're very much not probably as focusedinward as I would like to see when
(11:15):
it comes to building trust and thatwhich I think ultimately helps them build their
value creation, build their multiple andultimately have a positive effect on how people
outwardly look at them. Very interesting, Very good. So what what causes
a client? You mentioned a client? What causes a client to come to
you specifically for help? And Iguess that's a two part question one is,
(11:37):
you know, what are the driversof them thinking, Hey, we
need help here? And then secondly, how do you how do you help?
How do you differentiate m we I'mgoing to take that one. Sure
clients, they typically reach out fora couple really basic reasons, actually bringing
a new product or service to market, entering a new market with a current
(12:01):
product. Right, I've got thisproduct and I don't know how it plays
in this particular space. Sometimes they'restruggling to achieve unexpected growth, especially portfolio
companies in the painting world, forexample. It seems like the market's growing
faster than I am. What's goingon? Um, Sometimes we need to
just help our clients understand, youknow, where they fit and where they're
(12:22):
best suited to win. And that'swhere I was talking a little bit about
profitable growth the other piece of that. And you know, you've got the
three of us one and we're kindof a good mix, you know,
because well, you know Chris theanswer, you know, I say,
the answers in the market. Iknow the numbers don't lie. Chris goes
numbers, right, So we've gotthis combination. I guess that the inward
(12:43):
and outward is Josh was pointing out, but the numbers don't lie, And
I'm like, right, but there'smore than the stories than the numbers.
And I think that's really how we'rebest suited to help as we're looking at
all of those things and trying tohave it all come together. And you
know what I mean, story workfor you? Yeah, what would you?
(13:05):
I'm just putting myself in the mindof a listener that might say,
Okay, I hear you, butI got that covered, right, I
can do that myself. Why whymight they outsource this role to you?
Well? What what? What whatyou probably know is is that running a
business is not only a full timejob, it's two full time jobs.
(13:28):
Right, So, um, youknow, could they do this? Yeah?
They could if they don't care tosee anybody ever and sleep right.
I mean it's basically, you know, if you really want to take the
time to do this, right,you're gonna look at the perspectives of a
lot of different people. You're gonnalook at numbers from a lot of different
angles, right, So you're gonnalook at what customers think and what they
(13:48):
value, right, how they perceiveyou. Do you need to change that
perception or not? How competitors perceiveyou, what competitors are going to be
focused on, and then you haveto decide what portion of that could you
even addressed, and then the costof addressing that and the likelihood of success
in addressing that, and all thosethings take a tremendous amount of time and
(14:11):
focus. And if you are runninga company, your focus is going to
be the company, right, It'snot going to be You're not going to
have enough time focus or the processthat we do that we developed and we
use all the time. Right,It's just not going to be something that's
efficient for you to do. AndI think I'll add one other thing to
(14:33):
that. I think I've spent alot of time working with like people who
are already in trouble and are respondingto events. And I think where we
come in these days is a lotof good businesses as they're trying to grow,
and I think the ones that havebeen most successful, in my opinion,
they understand that they have blind spotsand that they need an independent view
(14:54):
as to where both where those arein Echobeth, where they have other opportunities
for growth just their blind spots.I think that those are the ones that
people regardless of of what they mayview that they have covered. To echo
what Chris is saying, the oneswho I think have been most successful also
are ones who who are cognizant thatthey can't cover everything, and they come
to us for helping them understand wherethey have other opportunities and where they're not
(15:18):
doing as well. Josh, yousaid, when you think of these examples,
maybe there's an example you can thinkof in which you really had had
an impact and there was a surprise, or things went in a direction maybe
the client didn't expect or you hada real a real Impactum, And I
(15:45):
turned to you, Josh, onlybecause you had talked about sort of examples
your experiences. Yeah, I thinkI have one that actually is relatively recent.
And I think this also speaks toand bet that you'll recognize this just
because it's something to be working onrecently. But I think from we recently
just looked at an organization that wasconsumer products driven but was very much split
(16:07):
between selling to individuals and entities thatreally need to buy something to keep operating
and for like access for medical reasons. But then on the flip side,
they also are selling to multiple typesof individuals and commercial who are who are
spending money discretionarywise and they don't reallyneed the product, but want to do
it because it kind of fits theirlifestyle. And what we realized is that
(16:30):
we had felt as we had lookedinto this, and again this speaks to
expectations and to coming up with anindependent view. We had felt when we
looked at opportunities that their opportunities werevery much driven mostly by what else there
was that people needed specific to whatthey were looking for. And I don't
(16:51):
mean our product, our initial focus, the initial impact that we looked at
was focusing on an enthusiast product whenin many ways we saw growth coming from
the non discretionary side and the peoplethat needed it more when it comes to
that, and I think that wealso felt that where the client was focusing
maybe was not going to meet theirend goal growth expectations and again value creation
(17:15):
compared to what their initial thoughts were. And I think they were I wouldn't
say that they were surprised, butI think it spoke to they had seen
some risks based on their initial viewpoint. I think we helped them think through
whether there were actual risks in thatprocess. That's what I could at least
think of individually. When it comesto a recent impact of looking something based
on your your expectations versus what youfind when talking to the market. Yeah,
(17:37):
interesting, Yeah, often the perceptionis probably skewed. For instance,
you know, from from this angle, I might look tall, but but
you know it, you know it'sit's not it's not the case, and
so and so. The idea isthat when you're in it, yeah,
I'm just I'm tall. So whenwhen you're in an industry, right and
you're and you're looking out, youprobably can't see, um, what the
(18:03):
customer perception is of you. Youcertainly aren't going to hear what the what
your competitor's perception of you is.And even if you were able to ask
them, they probably wouldn't tell youthe truth. And and so you know
that information is important and it's importantfrom it to hear it from an independent
third party who takes it from whoit's coming from and gives you the unadulterated
(18:26):
truth so that you can react toit and benefit from And how long does
your process typically last? Is therea typical Nothing's typical. I'd say we've
done stuff in as quickly as threeweeks and we've done stuff that's lasted a
few months. M okay, wellthat's a good range, yea. I
(18:48):
well, we only have a fewminutes left, so I want to go
ahead to any any lessons learned thatwe haven't shared already or words of wisdom
for listeners. In terms of growersor choirers, those that are being more
intentional and disciplined about strategic growth,words of wisdom or suggestions that you might
(19:11):
have for them, Well, that'sgot to be Josh, your Beth.
I don't have a lot of wordsof wisdom. So well, I think,
you know, we just talked alittle bit about seeing things differently and
how we add how we add value, and I think there's a couple of
ways to look at that. Ithink it's it's always great when we can
(19:34):
develop an understanding of the value chainthat gives our client a unique way of
looking at that. That's just nottypical, I think in terms of like
really like what's the best way towork with us. We've had some examples
recently on an engagement where you know, if an engagement doesn't reach its full
(19:55):
potential, a lot of times it'sa communication breakdown. Or a lack of
experience using consult You know, we'rehere to make you look good. There's
no need to keep information from us. That's not really the kind of work
we do. It's actually we dovery supportive work and we want our clients
to tell us what they know andlet us build on it, you know,
our most successful engagements or when theyknow how to use their consulting team.
(20:21):
I think long term success is embracingan iterative approach to strategy, kind
of you know, using us allthe time. I suppose staying on top
of market courses, you know,aware of the evolution and revolution in your
industry. I mean it's kind ofa puzzle in motion and that's the fun
part. And if we're thinking aboutit all the time while somebody's running their
(20:41):
business, I mean, that's reallywhere we add the most value. Yeah,
that's really interesting and that sort ofhelps me in summarizing. And then
I'd love to ask anyone who couldelaborate on that concept of continuous evolution or
iteration. But you know, whenwe think about this, the reasons that
clients reach out to you are fora new perspective, a different view,
(21:04):
a fresh set of eyes, moreclarity. They've got a business to run,
their focus, they've got multiple jobsto do, as Chris said,
and you have access to data thatthey do not have, as you guys
have talked about. So when youtalk about iterating or beth, I can't
(21:25):
remember the word you use, butmore of an ongoing dialogue relationship, ongoing
insights strategy as a living, breathing, ongoing process as opposed to a static
event. Anything anything you guys couldadd to that, or did I capture
what your intent was? I thinkthe only thing I would say is we
(21:47):
have the benefit of being an outsider, but at the same time, like
when our clients recognize the value webring as our collective experience, but also
because of what we do, we'rein and out of all different industries all
the time, UM, and Ithink that allows us to bring a whole
set of perspectives. You know,it makes us a better partner internally externally.
(22:11):
Quite honestly, we all have agood mix and our clients in their
industry, but we can pull fromother industries, and I think that's value
makes sense. UM. So I'mgonna just ask more broadly, UM,
how how should clients reach out toyou? Your The website is a Claro
(22:36):
Partners dot com. UM, wouldyou like to share an email or UM,
what's the best way for them totake advantage of your services? Yeah,
you can email any one of usUM with any questions anytime. UM.
You know, we get a lotof we get a lot of phone
calls, so really, UM,you know, whatever is most convenient for
(22:57):
you in order to get in touchwith one of us, is it is
exactly what you should do. UM. You know the main number is seven
h three eight six zero three threefive five, so you can try that
as well. All right, great, Chris LINGERIEU, thank you, Josh
(23:18):
Present, Beth Hattle, thank youfor your time and your insights on value
creation. Remember visit Claro Growth Partnersor Claro Partners sorry Claro Partners dot com
for your for help with growth strategy, specifically value creation, but they also
(23:40):
offer market diligence, commercial due diligence, and sell side market studies and by
all means, visit Strategic Growth Counseldot com for all of our episodes and
show notes. Follow us to tosee the latest episodes and make sure that
we're in your listening que and giveus a thumbs up or a good good
(24:00):
rating, and uh we appreciate yourlistening, Thanks very much. This podcast
was produced by Hardcast Media.
Welcome to Strategic Growth Council podcast aboutstrategic growth and mergers and acquisitions for the
middle market. I'm kit Lyle,your host, and if you're interested in
learning more about organic growth, growthby acquisition or the sale of your company,
this show will be interesting or usefulfor you. And if the guests
(00:31):
today do a good job, itmight be equal parts interesting and useful.
I'm kidding. Thanks to our sponsorsa Claro Growth Partners, a strategy consulting
firms serving middle market M and A. Visit a Claropartners dot com. And
our second sponsor, of course,is Strategic Growth Counsel the Peer Advisory Council
(00:54):
slash Virtual Roundtable slash Mastermind group forsee your executives and business owners contemplating acquisition,
sale, or strategic growth. StrategicGrowth Council collaborates with participants in the
M and A ecosystem such as privateequity groups, lenders, ibanks, and
service providers making M and A happen. Visit Strategic Growth Council dot com to
(01:21):
learn more. All right, thatwas a long intro. Every episode I
interview an expert or a handful ofexperts, or a participant in the world
of Strategy Growth or M and A, and today I am joined by none
other than our sponsors at a ClaroGrowth Partners, or three of them anyway,
Josh Present, Beth Hattle, andChris Lanerou. Welcome, Thanks for
(01:46):
having us, Kid, thank you, thanks for being here. I know
you just had a engaging meeting andyou're just coming from one meeting to the
next. Sometimes it's hard to tosplice things up a bit, but I'm
glad you're here, Glad you madeit just in the nick of time.
(02:07):
Let's have a minute's background on eachof you, and we'll start with Chris
Launeru. So for those of youthat have seen this before, you don't
want to hear about me twice,but I basically ran the path of almost
everybody that you've seen an M andA from investment banking onto private equity and
now I'm the CEO here at AClara. So I'll do something a little
(02:29):
more personal, which is when I'mnot sitting at my desk, which is
almost always, I am glued tothe TV watching the New York Rangers,
and so I hope there's a lotof Ranger fans watching this. They're not
no I'm just kidding. Thanks Chris, Thanks for joining. Chris mentioned for
(02:50):
those of you who've seen him beforeheard him before, he was on a
previous podcast in which we talked aboutwhat was it self side or was it
by self side by side? Okay, and Josh present, Welcome, thanks
for joining. It's good to behere, Thanks for having me. I
a relative newbie to a Claro.I came here because I was very interested
(03:13):
in working with a smaller group ofpartners and ultimately helping to build out the
risk practice. My background is primarilyand incorporate investigative due diligence. I've worked
closely with private equity firms, hedgefunds, i'd be investment banks, and
outside counsel over the years in thedeal space across the spectrum, both by
(03:35):
side and sell side and integration.So I am looking forward to talking to
everybody today. All right, thankyou, Josh. And Beth, whose
last name I've been told rhymes withbattle. Beth Haddle Welcome, thank you
for being here, Thanks for havingme. My name is Beth Haddle.
I am a partner also at aClaro. My backgrounds in market strategy,
(03:58):
distributed systems, primarily navigating channels orroutes to market, because there's channels pretty
much everywhere. I've worked as aconsultant and in industry with companies of all
sizes, various sectors. I knowa lot of seemingly random things about industries
that most people don't get to talkto. I believe, as my colleagues
(04:23):
have heard me say, that theanswers in the market and often business success
is credit kid, and more onwhat you do in the market than your
service or your product or your marketcondition. All right, Well, as
Chris mentioned a moment ago, he'sbeen on the show before talking about the
buy side and the cell side,and we're today, we're we're gonna be
(04:44):
talking about something different. We're gonnabe talking about kind of that vast middle
ground of a whole period of aprivate equity group that we refer to as
value creation. But but but first, and Chris, I'll turn to you.
You know, where does value creationfit into the grand scheme of services
that a Claro offers? Did Idescribe it? Well, it sort of
(05:06):
bookended and it's stuck in the middle. Yeah. So, um, it
is a significant portion of our business, but one of the smaller. So
you know, kit Kit mentioned.You know, we've talked about cell side
when you're selling a business and buyside when you're buying a business, and
the diligence associated with that. Forus, that's a majority of what we
do. But for a business owner, most of the time is actually spent
(05:30):
owning it, right. And whenyou're owning it, what you're trying to
do is you're trying to grow it, and there's a lot of different questions
and studies and things to work onthat are associated with that. So that
portion of our business is probably abouttwenty to okay, and the other the
other two service areas are market orcommercial due diligence and sell side market studies.
(05:58):
Okay, all right, So yeah, what does value creation mean?
And I've been trying to think ofa context for this myself, you know,
because when you're trying to increase thevaluation of a portfolio company, and
there's a lot going on, right, there's equal parts art and science,
(06:18):
and I guess, you know,as I boil it down to the lowest
common like simplest level for me towrap my head around, I think of
Harold and Kumar or Cheech and Chong. Right, So what if what if
their task is to grow a littlepot seedling, you know, a little
cannabis. They've got a private equityfund called Harold and Kumar Capital, and
(06:43):
they're growing weed in some grow room, and they've got a grow light,
and they've got like a drip ofirrigation, and they've figured out the right
concoction of potassium and nitrogen and fertilizerand dirt and so forth. That's just
plain science, right. It's realeasy because all you have to do is
get the get the proportions right.But if you turn that into a true
(07:09):
business and you're needing to grow thatbusiness, there's a lot of other stuff
going on, right, So maybemaybe my analogy was not so good.
But my point is there's a lotof complexity. So what what what what
is value creation? Um? Well, I think Beth is probably going to
have the best answer to this.Um, So I'll say something not as
(07:31):
eloquently and then I'll ask Beth tofix what I said. But um,
you know, so get in yourexample. You know you're talking about,
um, the creation of a product. But there's always a more efficient way
to either create the product, distributethe product, market the product. There's
(07:54):
going to be hurdles to overcome.There's going to be other competitors doing things,
you know, in that market withthe same products, Right, There's
going to be bigger entities and smallerentities competing in different ways in different regions.
So understanding those and navigating those asbest as possible right within a market
(08:15):
is value creation. Um. Andyou know, Beth, Josh, you
know, I don't know what Ileft out, but I'm sure that you
do. Yeah, well, Iguess I would say a couple of things.
One is you talk about growth,which is always the goal, right,
but I think sometimes we have toreally think about what makes profitable growth
and profitable growth And I started tosay this at the beginning, is sort
(08:39):
of about what you do in themarket and understanding and navigating what those things
are as really critical for value creationbecause you can you can sell a lot
of something and not necessarily have profitablegrowth. And I think the key to
making those plans and understanding and youknow, there's there's strategy and there's tactics,
and the harmony of those two thingsreally are what goes on in the
(09:01):
market, what's going on in thecompetitive space, what's going on internally that
allows you to respond and understand,um, the requirements out there and how
things are changing. I mean it'sreally um where we where we at a
value is when people are out there. You know, our clients are busy
run into business and so they don'talways have time to figure out what's going
(09:22):
on in the market and then howto therefore use their strengths the best way,
right, because the right strategy forfor one entity is not necessarily the
right strategy for another. And ourability to kind of pull those things together
and make a plan that works bestfor them. That's really I guess the
law and short answer of value whichyou know where where it adds value to
(09:45):
Tom what you're describing portfolio company.Yeah, so let's sort of summarize briefly
and then maybe Josh has something toadd. This is uh is science,
but it's also art. In otherwords, there's a lot of nuance and
prioritization and sort of where do wefocus to it. And then in addition
(10:07):
to that, there's internal versus external, and my understanding is that you all
would focus more, you know,less on you know, human capital or
the manufacturing value strategies, or operationalissues or IT issues and look more at
the external. Chris, you talkedabout brand and competition, and you know
(10:31):
there's channels, etcetera, etcetera.So any anything to add to what I
just said, Josh or would youdisagree with anything I just said? No,
I think they both got it spoton, coming from from different perspectives.
I mean, night if you hadto ask me also, I probably
have a completely even I wouldn't saydifferent perspective of maybe a different view on
even more how to create value.And I think for me, just kind
(10:52):
of coming from my experience, it'sI tend to view more looking at the
inward as ultimately affecting the outward andaround how people build trust. And to
think of some of just some ofthe organizations that we've worked with recently,
they're very much not probably as focusedinward as I would like to see when
(11:15):
it comes to building trust and thatwhich I think ultimately helps them build their
value creation, build their multiple andultimately have a positive effect on how people
outwardly look at them. Very interesting, Very good. So what what causes
a client? You mentioned a client? What causes a client to come to
you specifically for help? And Iguess that's a two part question one is,
(11:37):
you know, what are the driversof them thinking, Hey, we
need help here? And then secondly, how do you how do you help?
How do you differentiate m we I'mgoing to take that one. Sure
clients, they typically reach out fora couple really basic reasons, actually bringing
a new product or service to market, entering a new market with a current
(12:01):
product. Right, I've got thisproduct and I don't know how it plays
in this particular space. Sometimes they'restruggling to achieve unexpected growth, especially portfolio
companies in the painting world, forexample. It seems like the market's growing
faster than I am. What's goingon? Um, Sometimes we need to
just help our clients understand, youknow, where they fit and where they're
(12:22):
best suited to win. And that'swhere I was talking a little bit about
profitable growth the other piece of that. And you know, you've got the
three of us one and we're kindof a good mix, you know,
because well, you know Chris theanswer, you know, I say,
the answers in the market. Iknow the numbers don't lie. Chris goes
numbers, right, So we've gotthis combination. I guess that the inward
(12:43):
and outward is Josh was pointing out, but the numbers don't lie, And
I'm like, right, but there'smore than the stories than the numbers.
And I think that's really how we'rebest suited to help as we're looking at
all of those things and trying tohave it all come together. And you
know what I mean, story workfor you? Yeah, what would you?
(13:05):
I'm just putting myself in the mindof a listener that might say,
Okay, I hear you, butI got that covered, right, I
can do that myself. Why whymight they outsource this role to you?
Well? What what? What whatyou probably know is is that running a
business is not only a full timejob, it's two full time jobs.
(13:28):
Right, So, um, youknow, could they do this? Yeah?
They could if they don't care tosee anybody ever and sleep right.
I mean it's basically, you know, if you really want to take the
time to do this, right,you're gonna look at the perspectives of a
lot of different people. You're gonnalook at numbers from a lot of different
angles, right, So you're gonnalook at what customers think and what they
(13:48):
value, right, how they perceiveyou. Do you need to change that
perception or not? How competitors perceiveyou, what competitors are going to be
focused on, and then you haveto decide what portion of that could you
even addressed, and then the costof addressing that and the likelihood of success
in addressing that, and all thosethings take a tremendous amount of time and
(14:11):
focus. And if you are runninga company, your focus is going to
be the company, right, It'snot going to be You're not going to
have enough time focus or the processthat we do that we developed and we
use all the time. Right,It's just not going to be something that's
efficient for you to do. AndI think I'll add one other thing to
(14:33):
that. I think I've spent alot of time working with like people who
are already in trouble and are respondingto events. And I think where we
come in these days is a lotof good businesses as they're trying to grow,
and I think the ones that havebeen most successful, in my opinion,
they understand that they have blind spotsand that they need an independent view
(14:54):
as to where both where those arein Echobeth, where they have other opportunities
for growth just their blind spots.I think that those are the ones that
people regardless of of what they mayview that they have covered. To echo
what Chris is saying, the oneswho I think have been most successful also
are ones who who are cognizant thatthey can't cover everything, and they come
to us for helping them understand wherethey have other opportunities and where they're not
(15:18):
doing as well. Josh, yousaid, when you think of these examples,
maybe there's an example you can thinkof in which you really had had
an impact and there was a surprise, or things went in a direction maybe
the client didn't expect or you hada real a real Impactum, And I
(15:45):
turned to you, Josh, onlybecause you had talked about sort of examples
your experiences. Yeah, I thinkI have one that actually is relatively recent.
And I think this also speaks toand bet that you'll recognize this just
because it's something to be working onrecently. But I think from we recently
just looked at an organization that wasconsumer products driven but was very much split
(16:07):
between selling to individuals and entities thatreally need to buy something to keep operating
and for like access for medical reasons. But then on the flip side,
they also are selling to multiple typesof individuals and commercial who are who are
spending money discretionarywise and they don't reallyneed the product, but want to do
it because it kind of fits theirlifestyle. And what we realized is that
(16:30):
we had felt as we had lookedinto this, and again this speaks to
expectations and to coming up with anindependent view. We had felt when we
looked at opportunities that their opportunities werevery much driven mostly by what else there
was that people needed specific to whatthey were looking for. And I don't
(16:51):
mean our product, our initial focus, the initial impact that we looked at
was focusing on an enthusiast product whenin many ways we saw growth coming from
the non discretionary side and the peoplethat needed it more when it comes to
that, and I think that wealso felt that where the client was focusing
maybe was not going to meet theirend goal growth expectations and again value creation
(17:15):
compared to what their initial thoughts were. And I think they were I wouldn't
say that they were surprised, butI think it spoke to they had seen
some risks based on their initial viewpoint. I think we helped them think through
whether there were actual risks in thatprocess. That's what I could at least
think of individually. When it comesto a recent impact of looking something based
on your your expectations versus what youfind when talking to the market. Yeah,
(17:37):
interesting, Yeah, often the perceptionis probably skewed. For instance,
you know, from from this angle, I might look tall, but but
you know it, you know it'sit's not it's not the case, and
so and so. The idea isthat when you're in it, yeah,
I'm just I'm tall. So whenwhen you're in an industry, right and
you're and you're looking out, youprobably can't see, um, what the
(18:03):
customer perception is of you. Youcertainly aren't going to hear what the what
your competitor's perception of you is.And even if you were able to ask
them, they probably wouldn't tell youthe truth. And and so you know
that information is important and it's importantfrom it to hear it from an independent
third party who takes it from whoit's coming from and gives you the unadulterated
(18:26):
truth so that you can react toit and benefit from And how long does
your process typically last? Is therea typical Nothing's typical. I'd say we've
done stuff in as quickly as threeweeks and we've done stuff that's lasted a
few months. M okay, wellthat's a good range, yea. I
(18:48):
well, we only have a fewminutes left, so I want to go
ahead to any any lessons learned thatwe haven't shared already or words of wisdom
for listeners. In terms of growersor choirers, those that are being more
intentional and disciplined about strategic growth,words of wisdom or suggestions that you might
(19:11):
have for them, Well, that'sgot to be Josh, your Beth.
I don't have a lot of wordsof wisdom. So well, I think,
you know, we just talked alittle bit about seeing things differently and
how we add how we add value, and I think there's a couple of
ways to look at that. Ithink it's it's always great when we can
(19:34):
develop an understanding of the value chainthat gives our client a unique way of
looking at that. That's just nottypical, I think in terms of like
really like what's the best way towork with us. We've had some examples
recently on an engagement where you know, if an engagement doesn't reach its full
(19:55):
potential, a lot of times it'sa communication breakdown. Or a lack of
experience using consult You know, we'rehere to make you look good. There's
no need to keep information from us. That's not really the kind of work
we do. It's actually we dovery supportive work and we want our clients
to tell us what they know andlet us build on it, you know,
our most successful engagements or when theyknow how to use their consulting team.
(20:21):
I think long term success is embracingan iterative approach to strategy, kind
of you know, using us allthe time. I suppose staying on top
of market courses, you know,aware of the evolution and revolution in your
industry. I mean it's kind ofa puzzle in motion and that's the fun
part. And if we're thinking aboutit all the time while somebody's running their
(20:41):
business, I mean, that's reallywhere we add the most value. Yeah,
that's really interesting and that sort ofhelps me in summarizing. And then
I'd love to ask anyone who couldelaborate on that concept of continuous evolution or
iteration. But you know, whenwe think about this, the reasons that
clients reach out to you are fora new perspective, a different view,
(21:04):
a fresh set of eyes, moreclarity. They've got a business to run,
their focus, they've got multiple jobsto do, as Chris said,
and you have access to data thatthey do not have, as you guys
have talked about. So when youtalk about iterating or beth, I can't
(21:25):
remember the word you use, butmore of an ongoing dialogue relationship, ongoing
insights strategy as a living, breathing, ongoing process as opposed to a static
event. Anything anything you guys couldadd to that, or did I capture
what your intent was? I thinkthe only thing I would say is we
(21:47):
have the benefit of being an outsider, but at the same time, like
when our clients recognize the value webring as our collective experience, but also
because of what we do, we'rein and out of all different industries all
the time, UM, and Ithink that allows us to bring a whole
set of perspectives. You know,it makes us a better partner internally externally.
(22:11):
Quite honestly, we all have agood mix and our clients in their
industry, but we can pull fromother industries, and I think that's value
makes sense. UM. So I'mgonna just ask more broadly, UM,
how how should clients reach out toyou? Your The website is a Claro
(22:36):
Partners dot com. UM, wouldyou like to share an email or UM,
what's the best way for them totake advantage of your services? Yeah,
you can email any one of usUM with any questions anytime. UM.
You know, we get a lotof we get a lot of phone
calls, so really, UM,you know, whatever is most convenient for
(22:57):
you in order to get in touchwith one of us, is it is
exactly what you should do. UM. You know the main number is seven
h three eight six zero three threefive five, so you can try that
as well. All right, great, Chris LINGERIEU, thank you, Josh
(23:18):
Present, Beth Hattle, thank youfor your time and your insights on value
creation. Remember visit Claro Growth Partnersor Claro Partners sorry Claro Partners dot com
for your for help with growth strategy, specifically value creation, but they also
(23:40):
offer market diligence, commercial due diligence, and sell side market studies and by
all means, visit Strategic Growth Counseldot com for all of our episodes and
show notes. Follow us to tosee the latest episodes and make sure that
we're in your listening que and giveus a thumbs up or a good good
(24:00):
rating, and uh we appreciate yourlistening, Thanks very much. This podcast
was produced by Hardcast Media.
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