The 30th AVCJ Private Equity & Venture Forum was held in Hong Kong on 14th-16th November 2017.
On the 3rd day of the event, Lunar Partner, Derek Sulger, spoke on the Value Creation panel as part of the AVCJ Investment Summit. Other speakers included Mark Chiba, Group Chairman and Partner from The Longreach Group and Bobby Pauly, Partner from Tata Opportunities Fund. The panel was moderated by Oliver Stratton, Managing Director from Alvarez & Marsal.
The panel discussion centered around best practices of adding value to portfolio companies, toolkits to ensure management buy-in, challenges for improving operations, and the evolving roles of GPs in Asia.
During the panel, Derek provided several case examples of Lunar’s operational value-add initiatives with its portfolio, as Lunar continues to focus on leveraging a talent pool which can drive innovation, modernization and technology applications within Lunar’s portfolio of Chinese consumer businesses. Derek, having spent more than twenty years in China and acquired more than twenty businesses, also shared his view on the opportunities and challenges that the private equity industry is facing in the China market.
Key takeaways from the panel include:
- Valuation is always difficult, so it comes down to what you can do with these businesses. If you cannot clearly articulate your value proposition as an investor fund to management, then you quickly become a “taker of terms” when negotiating a buyout.
- Control deals are possible not only due to succession issues, but also because founders realize that to be successful in today’s dynamic economy, they need help to modernize and to scale. They are learning to work with private equity managers who can truly add value.
- Changing management and changing the culture is key to winning in the long-term. We need experience as well as young talents who can bring the entrepreneurism, innovation, and technology.
- Great managers are able to make tangible improvements to the business and its operations, and keep business growing by giving the company a mass uplift in new distribution, bringing them online, and upgrading products.
AVCJ is the leading source of information on private equity and venture capital activities in Asia. It organizes the premier Asia-focused conferences and networking events for the private equity industry. Its AVCJ Forum series of events regularly attracts the top private equity professionals, corporate executives and institutional investors to the financial centers of Asia.