Having paid record-high prices for recent acquisitions and with exit conditions likely to be less favorable than those at entry, private equity firms need a radically different formula to earn attractive returns. They are replacing passive stewardship with a hands-on approach to building value in their portfolio companies.

Bain is a leader in supporting an activist approach to ownership. We often find that the work we do immediately post-close has the biggest impact, and our numbers tell the story: The mean return of all investments during the first year where Bain & Company has been retained is 3.9 times invested capital, well over the industry average of 1.6 times. We assist in post-close activity in three time-tested ways:

• Blueprint, which defines the business's full potential and creates a program to capture it--complete with specific initiatives, detailed action plans, assignment of accountability for results, and a dashboard of metrics to track operational and financial performance;
• Focused initiatives, which identify highest priorities first, such as new product introductions, salesforce productivity and integration of add-on acquisitions; and
• Management workshops, which provide a structured, interactive forum for sponsors and managers to develop a value-creation plan.

Throughout, it is our objective to help owner-activists accomplish one overarching goal: to help strong management teams increase the company's value under their ownership more than they could have achieved if bought by the next highest bidder.

To find out more about Bain's work in this capability area, please contact the practice.