In 2009, Steve Yager and his colleagues noticed that their firm, The Gores Group LLC, was losing deals more frequently to firms with aggressive teams dedicated to certain industries, according to a recent profile of the firm in Buyouts.
“We found ourselves running up against guys who knew the space top to bottom,” Yager told Buyouts. The upshot: The firm made only one platform investment in 2009, compared to seven two years earlier, not the kind of pace needed to put a $1.3 billion fund to work.
By late 2009 and early 2010, the Los Angeles-based firm known for buying struggling businesses and corporate orphans knew it had to make changes. It undertook an internal re-organization, or what it prefers to call a “strategic re-focusing.” It added investment staff and divided employees up to focus on seven sectors, including the Gores mainstay of technology but also new sectors such as media and consumer. It also beefed up an already deep bench of operational professionals and its business development team.
“We decided if we had that vertical experience in the sector we would be much more efficient, our relationships with bankers would be stronger, and we’d see more flow sooner,” Yager said.
So far in 2011, the change appears to be bearing fruit, with the firm on track to log its most productive year in its 24-year history (see adjoining table breaking down annual platform investments). The strategic reorganization also illustrates how one promising firm both broadened and more clearly defined its investment strategy in a maturing industry that increasingly demands expertise in certain sectors to compete for deals.
To read the profile in full, go here (subs only).
Bernard Vaughan is a Senior Editor at Buyouts Magazine. Follow his tweets @BVaughanReuters.