Corporate Strategy at Berkshire Partners Case Solution
In the early 2000s, the industry had experienced negative growth due to the dotcom bubble crisis and was recovered by 2003 where the value of inexpensive debt had increased in the market, which was subjected to rapid growth with high profit margins for the companies under portfolio management.
The emergence of club deals in the mid 2000 had affectedthe firmâ€™s performance and led to steady growth. Under the club deal, many private equity firms combined into a group of large investor and targeted the market giants in order to acquire. On the other hand,this process under the assumptions of some investors was not successful because it was associated with high risk of targets, investments as well as exit timings for them.
In 2008, the expansion of private equity firms led to an increase $2.5 trillion of revenues, however the fundraising was standstill and the leverage buyout volume reduced by 70% of the expected volume of sales.
Investment process of Berkshire
The company has been engaged with different processes to evaluate the entire results of performance and to show the key indicators for the past success. Some activities have been analysed to assess the companyâ€™s control over the business.
The first step for the company is to assess the source deals where it wanted to invest in order to generate high profit volumes. In the early stage, the company offered different scenarios to the potential portfolio companies in order to acquire them, after which it was subjected for the investment in the pool of companies involved in the portfolio and after being acquired the company was engaged with leverage buyouts conducted through high volume of debts.
This team was further expanded into sector teams where different types of industries had been served to acquire for business expansion.
The second activity for Berkshire was analysing the deal of investment for new potential businesses. In the early years of recession, the company was engaged in looking for the market champions, who were still profitable in the industry level. The companydeveloped a team of different experts who met in the annual meetings in order to provide strategic decisions about the performance in the current portfolio activities.
It has been analysed that Berkshire was also engaged to value the portfolio companies where it offered attractive investment opportunities to the potential acquired companies and the post-acquired process included Berkshire as it wasalso supportive for the decisions making processes for the acquired companies regarding their marginal growth rate and business expansions.
New Organization and Governance
Berkshire was critically focusing on the internal growth of the company and hired top quality professional in order to run the operations. The company was concerned regarding professional growth and recruitment of talent management.
The traditional organizational structure was consistent until 2006 when the company expanded its certain activities which was subjected to new staff under the professional development. In the early 2006, Berkshire hired an expert to lead the team of business development activity subject to investment staff in order to increase the quality of investment deals. The company also hired the director of talent management with the focus to hire fresh talents into the business for further development…………………
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