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Vista's investment strategy is to acquire companies that meet this profile and then apply its proprietary set of Vista Standard Operating Procedures (“Vista SOPs”).
Vista Consulting Group (VCG) is a team of subject matter experts who work in conjunction with portfolio company executives and Vista investment professionals to help our businesses strengthen their operations through standardized and repeatable processes and methodologies. Vista Best Practices are what sets VCG apart within the industry, and continue to be developed and refined, year after year. VCG is dedicated to providing multiple points of leverage to support our portfolio companies. We are actively involved in providing support across the existing portfolio, and we serve as the immediate source of expertise for our new investments.
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We are a global business consulting firm that helps management make the big decisions and take action: on strategy, operations, mergers & acquisitions, technology and organization, and we measure our success in terms of our clients' results. Bain Insights highlights practical answers to questions many companies wrestle with, and our view on critical issues affecting specific industries. For more Bain Insights, visit us at. We include real-world examples in our Insights.
Bain & Company’s policy of client confidentiality prevents us from disclosing whether we have or have not worked with companies mentioned. The author is a Forbes contributor. The opinions expressed are those of the writer. By Hugh MacArthur, Graham Elton, Daniel Haas and Suvir Varma High asset prices and less confidence in market beta to lift returns in recent years have greatly narrowed the margin of error for private equity firms to deliver acceptable returns. Some general partners have looked back at the past decade of trials and errors to identify lessons and patterns that will shape their next approach to value creation. They have drawn up playbooks consisting of detailed, sequenced actions taken over time to maximize value from each investment. The application of a playbook to a target company will depend on three factors.
The first is the industry, as specific cost bases and capabilities have more or less relevance to individual industries. Manufacturing optimization clearly looms large in the chemical industry, and marketing and branding figure prominently in consumer products.
The second factor is the investment thesis: A playbook suited to a target company that has solid operations and is poised for growth may not work with a bloated company in distress. Third, the playbook should accommodate the target’s strategy to move the business forward. Companies competing in the same market can have very different strategies, and strategy determines where a PE firm can cut costs and where it should double down on investment. Given these factors, PE firms with the most highly developed playbooks today tend to define their deal sweet spots narrowly.
They may focus on investments in a single industry or on businesses across industries but with similar investment theses and opportunities for creating value. Vista Equity Partners, which invests primarily in software and technology-enabled companies, applies a set of more than 50 proprietary standard operating procedures in areas such as product development, sales and marketing, customer support, professional services and general administration. Vista’s in-house consulting group works with investment professionals and portfolio company executives to apply those best practices. In a recent case, Vista sold TransFirst, a payment processor that Vista had acquired for $1.5 billion a little more than a year earlier, for $2.35 billion. PE Hub reported that Vista focused on building out TransFirst’s back-end settlement capability while enhancing its sales channels. 3G Capital has a well-defined playbook that applies zero-based budgeting to consumer products or retail companies.
This differs from traditional budgeting processes by examining all expenses for each new period, not just incremental expenditures in obvious areas. A zero-based approach puts the onus on managers to justify the costs that need to be kept—a subtle but powerful shift in perspective from what should be removed. Teaming with Berkshire Hathaway to acquire Heinz, 3G eliminated roughly 7,000 lower-value positions and rationalized corporate and manufacturing footprints. 3G’s plays raised EBITDA margins from 18% to 26%. After aggressively expanding margins, 3G ran another play from its book, successfully merging Heinz with Kraft. While many playbooks started with a focus on cost reduction, the most successful ones today contain a strategic blend of cost and growth moves.