The interview below is part of a yearlong effort by McGuireWoods to profile women leaders in private equity. To read previous profiles, click here. To recommend a woman for a future interview, email Amber Walsh at [email protected].
Perkins has over 30 years’ experience in the finance and business development sectors, serving a variety of capital market participants. Prior to joining Huron, she led the acquisition sourcing efforts at Long Point Capital, a middle-market private equity fund. Perkins also served as vice president – business development for IRN, a market research firm, and has held senior business development positions at Fleet Capital Corp. and GE Capital Corp., where she originated and structured senior debt packages for buyouts of middle-market companies.
Q: What attracted you to PE?
Gretchen Perkins: I was attracted to PE because of the variety it offered. PE firms typically have the ability to review, meet, assess and invest in a wide variety of types of businesses. It is fascinating to learn the nuts and bolts of how a product is manufactured or how a business service is provided successfully and profitably. It is even more fascinating to see how two companies in the same industry can be markedly different in profitability or growth. The primary differentiator tends to be the leadership/management team. I enjoy seeing how different management decisions and leadership styles can produce such differing results.
Another reason I was attracted to the PE industry is the relationship-centric nature of the business. Our industry, while certainly getting more efficient in terms of deal flow, is indeed still very much a “people business.” Relationship-building is critical to convincing a business founder to allow a PE firm to make an equity investment in their “baby” or to achieve an introduction to said business owner by one of their trusted advisors. The business owner wants to be sure that they are taking on a financial partner that will be a catalyst for growth and expansion beyond their own capabilities.
Just to state the obvious, relationships are drivers in decision-making. For the most part, people in business deal with people they know, like and trust. Building strong relationships with business owners or their trusted advisors (attorneys, accountants, investment bankers, etc.) is paramount.
First off, they must know you, so there is significant branding and business development that PE firms need to do to be known by the stakeholders.
Next, they have to like you. There are multiple sources of investment capital. We all choose to work with those we like because there are many to choose from. “Are they good guys to deal with?” is the question a founder asks when contemplating a financial partner. Reputation goes a long way in this.
And lastly, they need to trust you — trust you to deliver on what has been conveyed, trust that you have the experience to indeed help them grow, and trust you to honor your commitments. Only when these three soft and subjective areas are in alignment do deals occur.
Q: Why is it important for more women to pursue careers in PE?
GP: It is important for more women to pursue careers in PE for a number of reasons. Women bring a different perspective and approach to bear. We have a different history of experiences, motivations and context.
I don’t think it is a generalization to say that women typically excel at relationship-building. We like harmony and seek to achieve it. The private equity community benefits from this goal by women’s consensus-building, establishing a positive culture and coaching. We are able to recognize that everyone at the PE firm has different strengths/gifts, and we strive to create an environment where those strengths are utilized (just like we do with our children). These relationship skills are certainly helpful for the PE team, but also can be helpful in convincing business owners to partner with a PE firm and for relationship-building with the limited-partner community.
Women are lifelong multitaskers. Any working woman who has a family has mastered the art of multitasking. Again, the PE industry benefits from these skills, with women’s ability to juggle multiple projects, pivot quickly from one issue or task to the next with ease, and maybe most importantly, cross off something from our to-do list (women are very task-oriented), contributing to efficiencies and productivity of the team.
I would be remiss if I did not take this opportunity to suggest there are also a few areas in which women in PE could improve. We need to demonstrate resilience, a proper level of dispassion (this is business, not personal) and confidence. If we can improve in these areas, we will have more women who remain in this industry for the long term.
A variety of skill sets and a diversity of perspectives and approaches typically result in better decision-making, which is why it is important for more women to come into the PE industry. Multiple studies show that companies with a higher proportion of female leadership are more profitable. The investor community should want to see more women in leadership simply for the profit motive.
Q: What advice would you provide to women-led companies interested in securing PE?
GP: I would first and foremost recommend engaging strong advisors. This would include an attorney that is specifically a mergers and acquisitions (M&A) attorney. The current attorney that has been doing your real estate work or general corporate business, for example, is probably not the best choice if that firm does not specifically have an M&A department. Many a deal has been derailed by a seller’s attorney without proper M&A experience.
This suggestion also applies to your accounting firm. I recommend engaging an accounting firm with a strong transaction advisory department to do a quality of earnings (QofE) report in advance of seeking investment by a PE firm. This is important. The accountant will scrub your financials and make sure that whatever you show to PE firms is completely supportable. There is a cost to undertaking these sorts of things, but in our experience, they are worth the investment.
If I were to cite a single area that repeatedly causes deals to not happen, it would be that the PE firm’s accounting due diligence identifies accounting practices that need to be corrected or restated, resulting in a lower EBITDA/cashflow figure, which then changes expectations of underlying value for all parties. Perhaps a business owner does not want to go ahead with the investment at the resultant lower valuation. Or perhaps the PE firm changes its mind on making the investment as a result of a lower cashflow figure. Again, this derails deals consistently and can be avoided by engaging a presale QofE report.
Note: The views presented herein are those of Gretchen Perkins, and not necessarily those of Huron Capital Partners. To contact Perkins, email [email protected].
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