Over the years Sun Capital have made a sterling reputation for themselves in buying and bringing value to companies all over the country.
This has come at a time where rival companies haven’t perhaps enjoyed as much success. While some might point to some sort of complex formula that Sun Capital adopt, it’s actually much simpler than what the press like to make out.
The factors Sun Capital look at when considering a company
In a recent interview, Marc Leder was asked what the main factors were when Sun Capital had found a company that they thought could be worth pursuing.
It was an interesting question – but one that spilled some even more interesting answers.
For example, unlike some other companies in the industry, the main motto for Sun Capital is investing in those companies which are simply under-performing and just appear challenging. In comparison, some rival investment groups would be immediately put-off by this – but for Sun Capital, it’s enticing.
The reasons for underperforming are obviously critical. A lot of the time its related to a lack of previous investment in the business or just poor strategy – these are the types of areas which can be fixed.
However, even if the company is under-performing, Leder still insists that there are various boxes that have to be ticked before investment is made. They have to be sure that their expertise in business operations is going to make a difference.
They have to make sure that there is a management team available, whether it’s one that’s currently there or one which is external and could be partnered with. Thirdly, there has to be some signs it’s a market leader.
Once these areas are ticked – the company is a possibility.
How Sun Capital attempt to improve a company
In the very same interview, Leder revealed some telling insights in just how Sun Capital make such a success out of those companies that they do end up buying.
There is of course the operating tools that are accessible to Sun Capital – with all of these able to make a difference to any company that benefits them. As is often the case, without having a significant backer such as Sun Capital, these tools are just out of the question.
Something that was surprising was Leder’s revelations regarding culture studies. Upon purchasing a company, Sun Capital perform what is known as a culture study. This is exactly as it sounds – a study to see exactly how the workforce culture is. From this point on, they work with the management of the company to improve this.
Generally, the study will look at issues such as mission, involvement, adaptability and consistency. By ironing out any flaws with these areas of culture, the company have found that performance tends to improve substantially.
Most of the time the changes are not major either – just factors which Sun Capital have collected over their history. It might just be improving the team orientation in a bid to make a company more productive – it’s just an example of Sun Capital using their experience and success to greater effect with those firms in which they purchase.