Page 6 - TACC 2023 Program

6 HOUSTON BUSINESS JOURNAL FEBRUARY 24 - MARCH 2, 2023 FEBRUARY 24 - MARCH 2, 2023 HOUSTON BUSINESS JOURNAL 7

19th ANNUAL ACG CAPITAL CONNECTION SPONSORED CONTENT SPONSORED CONTENT 19th ANNUAL ACG CAPITAL CONNECTION

How Evaluating Finance Functions Helps Navigate Inflation Todd Throckmorton, National Director, Scaling a Company | Tackling the Talent Search Human Jen Sudduth, Founder / Managing
Private Equity, Bridgepoint Consulting
capital is the single most important driver of growth. Partner, Sudduth Search, LLC
As our pocketbooks are feeling the will allow you to hedge against sharper future inflation and However, some areas of pricing strategy can be revisited
pinch of the recent price increase of accurately forecast costs in the long term and optimized to cover current expense increases and maybe
everyday goods and services, so are You may have to lock in slightly higher prices for now, but even increased margins. This article first appeared in the Q1 ambitions. is made, the best candidates will be hired by companies that
the bottom line of most start-ups, this mitigates future inflation risks and factors in average Key considerations for reviewing pricing strategies during 2023 issue of Texas CEO Magazine. 3) Establish a hiring process and use it. don’t wait. If there is someone who meets or exceeds the
mid-size businesses, and public inflation in most economic environments. inflationary times: Recent research indicates that more No matter the size of the company, create a hiring process requirements, has proven experience, and has completed
entities. The cost of supplies and Review past pricing strategies on various sales channels than half of firms report significant and stick to it. For each role being recruited, identify the the hiring process, then make the offer. Complete alignment
materials is currently increasing at 2. Reduce products and services offered to focus on those that might be outdated and reconfigure the pricing structure growth challenges in the area of requisite skills and experience and continually refer back to this from the team rarely happens. Encourage interviewers to give
a rate faster than forecasted. At the most profitable and essential to the bottom line to meet the new economic reality for customers. attracting talent, topping all other guide in hiring. Do not hire on gut feeling alone, and do not input, but not “yes” or “no.” Their perspective is important and
same time, labor costs are increasing Economic challenges often force businesses to focus on Consider implementing variable pricing structures with
Todd Throckmorton, factors. For high-growth companies, hire the first person who seems excited about the company. multiple opinions decrease bias, but don’t slow the process
National Director, Private as the job market is tightening. what they excel at. The most economically efficient route to new customers so that the margins can fluctuate with securing great people is truly a make- On the flip side, make the hiring process look like that of larger down by rejecting qualified candidates.
Equity, Bridgepoint Subsequently, businesses raise increase profits is to focus on the high-margin core products pricing fluctuations of supplies and materials and individual
Consulting Jen Sudduth, Founder or-break issue. Where should a CEO and more established companies. Given how competitive the
customer prices to cover these . cost components (e.g., shipping, insurance, or customization / Managing Partner, start to tackle this growth obstacle? high-growth space is, make sure the company comes across 7) Invest in the team.
costs, which is always tricky. 3. Revisit and optimize strategy for operating and capital costs). Sudduth Search, LLC
To navigate this environment, it is essential to plan spending Review pricing structures of current customers and identify The following steps offer a roadmap as legitimate. That means keeping the first interview just that, Equally important to attracting top talent is expanding the
strategically for these rising prices and to avoid reactionary As a result of the strategy outlined above (#2), all operating those with unprofitable pricing agreements, and make for building a company’s internal a formal interview. If the hiring process is too casual from the knowledge and skills of the team. In fast-growth environments,
capability to draw in highly talented
employee development cannot be an afterthought. An
start, the right candidate may be put off if they do not see a
business changes. Inflation can aid some industries, such and capital spending should be evaluated in relation to the changes where needed. people—and retain them once they get there. focused effort in bringing on the right team. intentional, proactive approach to professional (and personal)
as real estate or commodity industries. However, industries core products and objectives of the business. These steps can help mitigate or even increase profit development is key to low attrition. It doesn’t so much matter
particularly vulnerable to these inflationary times are low- Do expenses support core products and services and any margins and allow you to forecast margins better. 1) Hire a human resources executive. 4) Let go of hiring after a certain point. whether you offer discretionary funds for development
margin/high-volume businesses that rely on ordering potential growth? Can capital be strategically spent to reduce Although it’s sometimes seen as a cost center, the HR Once the team starts multiplying, the course is more critical. opportunities or institute a formal submission process. What
large amounts of materials and supplies and can have future labor needs? These questions directly affect the next Final Thoughts on Finance Functions to Evaluate function can impact the broader business significantly. How Mis-hires are costly. Once a small business graduates to a is important is that you offer a plethora of these opportunities
high employee turnovers, such as the manufacturing and area of focus. During Inflationary Times much value is lost when a great employee quits? When midsized company (100-plus employees), a CEO should not and create conditions where employees can easily take
restaurant industries. If you are in an inflationary economic environment, there a candidate declines an offer after the team spent hours make the mistake of thinking they need to talk to every single advantage of them. Lastly, the social aspect of work is, in many
5 Financial Areas to Address to Increase Profit 4. Increase production with decreased labor are five financial areas in which you can plan for future inflation interviewing them? The reason some leaders do not prioritize prospect. They need to approve them. ways, most important, and it is too often overlooked. How
Margins in an Inflationary Economic Environment Labor costs increase in an inflationary environment. It and mitigate or possibly increase future profit margins. HR is because they have yet to see a good HR executive in available the CEO makes himself or herself to employees and
may be advantageous to convert variable-wage employees Navigating through this environment can help you obtain
1. Expense management of materials, supplies, and services to full-time salaries. Locking in employee wages will give you a clearer vision of your company’s core mission and help you action. A strong HR leader should own corporate culture, hiring 5) Know what the person in the position should achieve. how willing he or she is to show vulnerability is critical to how
Rising material and supply costs are the main threat to success and retention rates, training, and other aspects that What milestones should this person be achieving in six loyal employees will be.
forecasted profit margins. There are two ways to mitigate a precise forecast of labor costs and will help avoid employee improve the quality and efficiency of your core products and foster an engaged, productive workforce. months, a year, two years? Once that is clear, back into the
turnover disruption.
services.
this vulnerability: Need Help Evaluating Your Finance Functions? experience and skills a candidate should have in order to meet About Jen Sudduth
• Controlling the volume of expenditures as much as 5. Review pricing strategies for customers Bridgepoint Consulting’s dedicated team of financial and 2) Understand the importance of corporate ethos. those milestones. As the founder and managing partner of Sudduth Search,
possible Defining purpose is critical, especially for young companies. Jen Sudduth has more than two decades of experience in
When costs are reviewed and forecasted, optimal pricing
• Obtaining visibility into the future pricing of expenses strategies can be implemented to optimize margins. accounting experts provide a variety of advice and support, When there is little history to go on, the company’s team 6) Make a decision. executive search, recruiting transformational leaders for
including work in adherence, revised accounting standards,
Visibility into the prices of materials and services needed and mission are key differentiators. A strong culture will be a There is a careful balance between moving fast enough and scaling companies within the energy, technology, industrial,
to produce products is achievable by locking in future pricing Ultimately, the market will dictate your final pricing of products financial reporting processes, and public company readiness. magnet to attract candidates who share common values and going too slow. But if too much time passes before a decision and manufacturing industries.
and services, and long-term customers will be incentivized to
To learn more about our services, visit our website at www.
through longer-term vendor contracts. Renewing material lock in current prices over a more extended period to protect bridgepointconsulting.com
and service contracts and locking pricing into longer terms
themselves against future price increases.
PRIVATE EQUITY EXHIBITORS

Six Essentials for Driving a Successful Merger & Acquisition Integration Bryan Graiff, Partner and Private Equity Industry Leader, • AIC Holdings • Clovis Point Capital • Jumana Capital Partners, LLC • Rockwood Equity Partners
Armanino | Amy Julian, Partner, Strategy & Transformation, Armanino
• Alaris Equity Partners • Compass Group • KLH Capital • Route 2 Capital Partners
• Align Capital Partners • CORE Industrial Partners • Lateral Investment Management • Saw Mill Capital
With higher borrowing costs and diligence process should include a quality of earnings 4. Clearly outline roles and responsibilities for • Alpine Investors • Cotton Creek Capital • Latticework Capital Management • Seacoast Capital Partners
increased merger and acquisition review, tax diligence and structuring, IT assessment, integration planning and execution. • Altamont Capital • Craftsman Capital • Lead Capital Partners • Seaside Equity Partners
(M&A) competition, it’s more as well as a thorough predictive leadership assessment The cross-functional integration team is responsible for • Amberjack Capital • Crossplane Capital • LFM Capital • Shoreline Equity Partners
important than ever to conduct of the management team in place to assess their ability delivering cultural, organizational and operational alignment • ArchStar Capital • CVF Capital Partners • Littlejohn Capital, LLC • Silver Oak Services Partners
appropriate due diligence and to successfully scale and grow under a new ownership across the companies while achieving calculated cost • Argonaut Private Equity • Cyprium Partners • Longshore Capital Partners • Star Mountain Capital
assemble a strong integration structure. synergies. It is important that everyone understands their • Argosy Private Equity • Dominus Capital • LongueVue Capital • Stonehenge Partners, Inc.
strategy. Without that, the respective roles and responsibilities to successfully navigate • Aterian Investment Partners • Duke Royalty • Main Street Capital Corporation • Tecum Capital Partners
combined companies risk falling 2. Establish a clear integration strategy that is aligned a merger with high expectations and tight timelines. • Azalea Capital • EBSCO Capital • Mangrove Equity Partners LP • Tenex Capital Management
Amy Julian, Partner, within the ninety percent of with the M&A rationale – before the deal closes. • Balmoral Funds LLC • Edgewater Capital Partners • McCarthy Capital • The CapStreet Group
Strategy & Transformation, acquisitions that are not deemed Integration blueprints are driven by the rationale and 5. Don’t underestimate change management and
Armanino • BBH Capital Partners • Excellere Partners • Merit Capital Partners • The HEICO Companies LLC
successful a year later. strategic intent of the acquisition or merger. A rigorous communication efforts.
Before embarking on a plan can increase the speed and success of the merger or Uniting disparate cultures is often among the top • Benford Capital Partners • Freestone Partners, LLC • Midwest Mezzanine Funds • The Sterling Group
transaction, utilize strategic acquisition. Setting guiding principles for the integration challenges during an integration. For a successful unification, • Bison Capital • Gainline Capital Partners LP • Milton Street Capital • Third Century Investment Associates
planning, financial modeling and plan to determine which items to integrate and which to culture must be viewed as core to the business. This is • Blue Point Capital Partners • Generation Growth Capital, Inc. • Northcreek Mezzanine Fund • Transition Capital Partners
industry insights to ensure your keep separate ensures the buyer keeps the objective of accomplished by business leaders visibly prioritizing cultural • Blue Sage Capital • Genesis Park • O2 Investment Partners • Treaty Oak Equity
chosen subniche has the best the deal at the forefront. integration across all levels and locations of the newly • Bluehenge Capital Partners • Gerdau Next • Palladium Equity Partners • Trinity Hunt Partners
opportunity for yielding the highest combined company. Each business function should have • BP Energy Partners • Hamilton Robinson Capital Partners • Parkway Capital • Trive Capital
return on your investment. After 3. Hire or appoint a strong integration leader. an assigned sponsor that owns an implementation plan with • Branford Castle Partners, LP • Harren Equity Partners • Pelican Energy Partners LP • Trivest Partners
identifying your target, consider A strong integration leader is one that can quickly specific, consistent metrics. • Brookside Equity Partners • Hastings Equity Partners • Permanent Equity • Two Roads Partners
implementing these tips as you mobilize teams to support the combining of two • Caltius Structured Capital • HCI Equity Partners • Petra Capital Partners • Union Capital Associates, LP
Bryan Graiff, Partner and manage your M&A integration. organizations across all business units. This requires 6. Drive cross-functional integration and digital • Capitala Group • Heartwood Partners • Platform Partners • Valedor Partners
Private Equity Industry obtaining a high level of trust and commitment and transformation. • Center Rock Capital • High Street Capital • PNC Riverarch Capital • VSS
Leader, Armanino
1. Conduct pre-deal due demonstrating effective communication, problem- To achieve maximum value, ensure enough attention • CenterOak Partners, LLC • Highview Capital • PRI • Webster Equity Partners
diligence. solving, organizational and motivational skills. This leader is given to all functions in an organization during the • Centre Lane Partners • Incline Equity • Prospect Capital • WestView Capital Partners
Conducting holistic due diligence is critical to ensuring should establish the governance bodies and decision integration, including commercial, operations and back- • Chatham Capital • Industrial Opportunity Partners, LLC • RAF Industries, Inc. • WILsquare Capital
the buyer fully understands their purchase. This phase rights at the beginning of a post-close integration to office functions. Investing in technology solutions to bring • CIC Partners • InLight Capital • Red Iron Group
can save dollars and uncover risks that can lead to a quickly achieve planned synergies. real-time data insights and create operational scalability can • Clearview Capital • Insight Equity • Rock Hill Capital
completely different acquisition outcome. The due improve cashflow optimization and help maximize EBITDA.