For well over 15 years, DH has been working alongside the management teams of portfolio companies, putting in place strategies to grow sales, improve margins, reduce costs, generate cash and manage risks. This forms a key pillar of how DH operates, with bespoke value creation plans put in place for each investment and focus given to the make-up and potential impact of this right from the time the team starts evaluating an investment.
Active ownership has long been a core part of our investment strategy and is typically delivered through a combination of three main strategies:
- Strategic expansion; and
- Value enhancement.
Businesses owned by DH’s private equity funds have a strong record of completing and integrating acquisitions that help to transform the business and create value. By way of example, in our most recent fund we have made almost 50 add-on acquisitions across eight platform investments, transforming businesses and generating significant value.
The investment team works with the management team of each portfolio company to define the M&A strategy and source potential deals. DH either leads or provides support throughout each transaction, including the associated financing.
Management teams also benefit from DH’s extensive post-acquisition integration experience, which enables portfolio companies to efficiently integrate newly acquired businesses and capture the synergy benefits.
DH provides strategic, operational and financial support to help its portfolio companies expand both into new geographical markets and new product/service areas. We have helped many of the portfolio companies grow revenues in new markets and new geographic regions. As part of the active ownership approach, strategic goals are set during the initial investment process and are reviewed and refined as end markets evolve.
Having the right capital structure and using leverage conservatively have allowed our portfolio companies to continue to invest in their businesses and drive growth.
DH is rightly acknowledged as a pioneer in the area of active ownership and value enhancement having set up a dedicated team in 2002.
Our approach to value enhancement incorporates the following seven elements:
- Develop strategy;
- Grow sales;
- Buy-and-build integration;
- Cut costs;
- Generate cash;
- Manage risk; and
The approach to operational engagement begins in the pre-investment due diligence phase and continues up to exit. Throughout the investment lifecycle our dedicated in-house value enhancement team works integrally with the investment team.
The value enhancement team comprises professionals with experience across a wide range of industries and functional areas, including business strategy, M&A integration, ESG experience, sales and marketing transformation, supply chain management, lean manufacturing, working capital optimisation, procurement and sustainability. The team have a track record of working with businesses to shape successful strategies and prioritise improvement levers that add the most value.
The value enhancement professionals are not sector specialists and have direct knowledge of how to implement the seven elements listed above. This enables DH’s value enhancement process to be repeatable and is why the team has been able to achieve success across so many companies.
DH also has a global network of consultants and advisers who can support the value enhancement activity. This allows us to leverage the in-house expertise and work on many initiatives across the portfolio at any one time.