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Portfolio Holdings Under Pressure

Creating Maximum Enterprise Value

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EGI has the functional capability at the holding to drive growth far beyond management’s organic capability. EGI designs for revenues growth of 30%+ over organic projections, and EBITDA improvements of 25% or more

 

Private Equity portfolio aggregation anticipates various contributors to overall value. Laggard or underperforming EBITDA and Valuation holdings crate undo pressure on the management. General Partners and Limited Partners apply pressure seeking strategic solutions to optimize success. Investor demand for liquidity applies additional pressure when individual holdings are revealed to be lagging optimized value or worse, outright dead weight prior to closing date.

 

General partners with holdings that are performing strongly also seek to retain these beyond the portfolio closing date. Poor performing laggards without a disposition market create a real return burden to the portfolio, creating an interest in secondaries to deal with these burdens.

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EGI Capital, creates asset performance and optimized valuation and optimizes the multiple on invested capital in that holding and portfolio overall.

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EGI brings market-tested performance growth strategies to the Private Mid-Market and unlocks trapped equity in preparation for the sale of a business. We power a proven system for growing top line revenues, market share, profitability, and productivity, leading to an increase in EBITDA and creating a multiplier-enhancing pipeline for sustained performance.

PORTFOLIO PRESSURE TEST

EGI Capital provides private equity clients with a proprietary “SVR (Significant Value Reduction) Laggard Measure” based on the following inputs

 

  • How are you measuring lost equity now?

 

  • How much equity is the portfolio anticipating leaving on the table?

 

  • As you rank your portfolio companies, which are in the lower one-half of the portfolio performance?

 

  • Which companies are in the lower one quarter of the portfolio performance?

 

  • Which sluggish performance companies are flying in the lower 30% of its proforma plan

 

  • What is the burden factor - “significant value reduction total” (SVR) - of the total of all laggards?

 

  • What is the effect of the laggards dragging down strong gains elsewhere?

 

  • What would the aggregated returns of the whole portfolio be when the damaging laggards are perfected?

 

  • Of the companies which have low performance returns and are a drag on aggregated portfolio return, what hasn't been done to perfect performance?

 

  • What innovative tool has management not deployed to turnaround laggards?  

 

  • For what period is the portfolio permitting laggards at damaging returns?

 

  • Is Management accepting in aggregation the safe harbor that bad performers are acceptable (e.g. merely allowing for 20% failure rate).

 

  • What is Management’s laggard and bad performer mitigation policy?

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