Even though trends are normally determined by more mature markets there seams to be an increasing space for paradigm defying from more immature markets. Following this threat of though I wonder if there is an opportunity for Latin American PE firms to defy a central belief of the Global PE industry. The industry’s main stream approach is based on the paradigm that best financial returns are captured by buying distressed companies, aligning market forces and capturing unexploited synergies in a short period of time (3 to 5 years). Overlooking some conditions that will have a high impact over turns: management capability, time dedicated by GP and the use of industry best practices, that need to be addresses in order to obtain full value of the investment.

1. Unleashing
organizacional value
Value proposition for LATAM
Private Equity & Venture Capital
January 2015
Ignacio Garcia – Santos
igs@amg.la

2. Private Equity in Latin America

3. Latin American economies are
growing...
..at a steady pace even though there are still big
political and infrastructural issues to be solved…

4. With a strong middle – income class…
..that will leverage a market expansion in the coming
years creating big opportunities for those with local
experience and networks…
“The
poten*al
impact
of
VC
in
La*n
America
is
enormous
considering
that
small
and
medium
enterprises
account
for
more
than
95%
of
all
firms
in
the
region
and
are
responsible
for
60%
to
70%
of
employment”

5. Situation which is attracting Global PE
to the Region…
“Absorbing
the
lessons
of
what
has
not
worked
well
in
China
and
India,
GPs
and
LPs
are
broadening
their
horizons
beyond
the
BRICs
to
seek
diversifica*on
in
markets
that
will
offer
the
next
wave
of
growth,
including
Sub-­‐Saharan
Africa,
Southeast
Asia
and
La*n
America”
Bain
PE
Report
2014

6. A recovering industry focused on
expansion…
…creates a unique opportunity for Latin American PE
funds with value creation and long term investment
philosophy…
Mid
–
Market:
Size
of
investment
(10
–
100
mill
usd)
or
Company
revenue
(30
–
250mill
usd)
A
total
of
US$3.5b
was
raised
during
the
first
half
of
2014,
with
final
or
par*al
closings
for
23
separate
funds.

7. An opportunity that requires…
Organizations capable of dealing with developing
economies and complex business environments.
Targeted
policy
tools
to
promote
business
development
in
La*n
America
OECD
2013

8. Our approach & value proposition

9. Organizations are complex systems with
a high interdependence between its
elements..
The disconnection between any of the elements of the system
has a huge impact on its execution capability destroying value
as a consequence.

10. Each phase of a growth cycle requires a
distinctive articulation of the elements…
Time
Complexity
Understanding the organizational system correctly is critical in order to
determine the best possible approach to its challenges.

11. Having a clear understanding of which
are the main restrictions impeding
growth…
is crucial in order to determine the most appropriate
approach to unleash the potential value.
Accountabilities
Capability
Integration
of value chain
Coordination and
Execution
Vision
Leadership
Identity Versatility
Value
strategy
Alignment and
planning
DIRECTION
CULTURE
CAPABILITY
DELIVERY

12. Our value proposition...
Stage: Value strategy vehicle evaluation
Offer Description
o Diagnostic tools:
Transformation index ®
o Organizational diagnosis to understand how the system is
working and what is the most important deficiency and
restriction to unleash value.
o Specific cultural assessment.
o Diagnostic tools:
Organizational
complexity diagnosis
o Determine how much value is lost due to organizational
deficiencies in levels of work, role relationships, accountability
setting and organizational design.
o Diagnostic tools:
Capability assessment
o Evaluate GP, Board or Management capability to manage the
vehicles complexity.
o Determine adequate capability and strategy / role correlation to
increase probability of promised returns.
“We increase the funds knowledge of the organizational
capabilities that affect investment returns in a simple and
measurable way”

13. Our value proposition...
Stage: Value strategy vehicle development
Offer Description
o Organizational
Integration
o Cultural readiness pre – integration
o Cultural integration (during integration process)
o Organizational strategic alignment (after integration).
o Organizational design
& Capability planning
o Organizational design aligned to the strategy of one investment
object or the combination of several.
o Determine the most appropriate governance system and
decision making allocation according to the strategy.
o Install talent management system and leadership practices to
assure requisite organizational capability.
o Exit alignment of
management team
o Prepare management team to sell company increasing
transition readiness and strengthen leadership to conduct the
transition.
“We increase the investments viability reducing time and effort in
the performance improvement of the investment object”

14. Our experience in LATAM…
Some successfully cases..
Company
Year
Project
Descrip8on
AESA
YPF
Group
2014
Organiza*onal
value
chain
Integra*on
In
2014,
aaer
7
years
of
having
worked
in
the
company's
turnaround
aaer
near
bankruptcy,
AESA
needed
help
dealing
with
its
growth
in
the
Oil
&
Gas
engineering
and
construc*on
services
industry.
The
local
industry
was
under
a
huge
expansion
fueled
by
shale
gas
which
required
a
more
integrated
company
capable
of
assuring
value
delivery
at
a
total
new
level
of
demand.
AMG
lead
the
transforma*on
and
value
integra*on
process.
Britanite
Grupo
CR
Almerida,
Grupo
Breca
and
Sigdo
Koppers
2013
Organiza*onal
design
and
capability
assessment
In
2012
the
mining
services
company,
Britanie
(Brazil),
incorporated
Sigdo
Koppers
(Chile)
and
Grupo
Breca
(Peru)
as
stakeholders.
In
2013
the
new
board
asked
AMG
to
help
determine
which
would
be
the
most
adequate
organiza*onal
design
and
capability
requirements
for
the
new
strategy.
We
designed
a
new
organiza*on
and
the
first
to
levels
of
management
where
evaluated
to
determine
their
fit
to
the
new
role
requirements.
Petrobras
Argen8na
2004
Execu*ve
Capability
Assessment
In
2004
the
Oil
&
Gas
company
Petrobras
Argen*na,
acquired
Pecom
Energia
from
the
Perez
Companc
Group.
During
the
process
AMG
Consul*ng
assessed
all
key
execu*ves
and
advised
on
the
conforma*on
of
the
merged
company
in
order
to
assure
adequate
capability
in
the
joint
company.

15. Our experience in LATAM…
Some successfully cases..
Company
Year
Project
Descrip8on
LAN
&
TAM
LATAM
Airlines
Group
2012
Cultural
Integra*on
Aaer
the
integra*on
of
the
two
airlines
was
anounced,
in
2012
all
regional
and
“long
haul”
opera*ons
where
merged
bringing
together
two
very
different
cultres
and
management
styles.
AMG
was
incharge
of
integra*ng
the
management
team,
clarify
new
accountabili*es,
and
strengthen
the
team's
dinamic.
At
the
same
*me,
and
during
6
months,
we
worked
with
all
the
opera*ons
to
increase
cultural
integra*on
redeaness,
develop
leadership
capabili*es
to
deal
with
change
and
cultural
flexibility,
and
align
opera*ons
with
merger
priori*es
and
cri*cal
areas
of
success.
Alsacia
&
Express
2011
Organiza*on
Design
of
integrated
company
In
2011
Grupo
Rios
acquired
the
remaining
stake
in
Express
consolida*ng
its
posi*on
as
the
biggest
operator
of
the
integrated
public
transport
service
of
San*ago,
Chile
(TransSan*ago).
The
new
merged
company
needed
to
combine
opera*ons
and
deal
with
change
without
affec*ng
a
very
sensible
public
service.
We
worked
on
the
change
process,
cultural
integra*on
and
designed
an
organiza*on
capable
of
simplifying
opera*ons,
assuring
a
bejer
quality
of
service
and
reducing
inefficiencies.

16. Backed by strong industry expertise

17. Backed by a world class industry
expert ...
Adding unique world class industry expertise to our
organizational transformation experience...
AMG and Enhancer have partner to offer their unique
experience in the industry and transforming
companies to the Latin American PE Market.

18. Enhancer
Executive Advisors
• Since 1998, Enhancer has contributed to improved performance and
significant value creation in over 200 large and small companies as
well as public institutions. Enhancer consists of one of the most
experienced groups of corporate advisers in Sweden today.
• In recent years Enhancer has through its work in a wide range of
industries and in many countries had the opportunity to study in detail
the real and factual organizational conditions to capitalize on a
company’s full potential.
• Examples of clients where Enhancer has been engaged are the
Ministry of Justice, The Swedish Police, Swedish Prison and
Probation Service, Vattenfall, Fortum, PostNord, SJ, Svenska Spel,
Eniro, Ericsson, Sony-Ericsson, TeliaSonera, SEK, SAS, Strålfors,
Bisnode, Metronome, Lernia, Johnson & Johnson, Toyota.
• In addition a range of other small and large companies are on the list.
One Private Equity player has been engaging Enhancer in more than
thirty of its portfolio companies.
• Enhancers behind the scenes success is based on two fundamental
assets. The first is a set of vital scientific findings constituting the
levels theory, SST (Stratified Systems Theory) by Dr Elliott Jaques
and second, a group of senior consultants with high capability and a
solid background in Business and Academia.

19. Enhancer
Success case study I
Predictability
of
Investment
Performance,
AP6
• AP6
is
one
of
six
public
pension
funds
in
Sweden
and
invests
primarily
in
private
equity
funds
and
directly
in
privately
and
publicly
owned
companies.
• In
2002
Sjäje
AP-­‐fonden
(SF)
became
aware
of
Enhancer’s
science
based
methodology.
The
SF
invests
in
both
private
companies
directly
and
in
PE
firms.
• The
SF
decided
in
2002
to
use
the
methodology
to
improve
its
performance
(in
more
than
30
companies)
and
at
the
same
*me
conduct
a
study
to
validate
the
importance
of
ensuring
that
companies
have
the
right
CEO
and
ensuring
that
PE
firms
have
partners
at
the
required
level.
• Using
Enhancers
method
for
determining
the
match
between
the
level
of
the
CEO
role
and
the
CEO,
SF
was
able
to
predict
whether
the
companies
would
perform
below
or
above
the
required
rate
of
return
as
investments.

20. Enhancer
Success case study I
24
companies
6
Private
Equity
Firms
Investment
outcome
Posi*ve
Predic*on
Nega*ve
Predic*on
Posi*ve
Predic*on
Nega*ve
Predic*on
Posi*ve
Outcome
11
3
3
-­‐
Nega*ve
Outcome
1
9
-­‐
3
Prospec8ve
study
of
24
companies
and
6
private
equity
firms:
Results,
2-­‐8
years
later:
26
out
of
30
companies
performed
as
predicted

21. Enhancer
Success case study II
Capturing
improvement
poten8al
in
India
Project
• Analysis
and
organiza*onal
development
in
major
growth
market
(India)
Change
Program
• Implementa*on
of
clear
and
aligned
tasks
• Adding
managerial
layer
with
higher
capability
Results

22. Enhancer
Success case study II
Op8mizing
SoYware
Development
Unit
Situa8on
• Aggressive
low
cost
compe**on
• High
internal
cost
level
Change
program
• Clear
and
aligned
tasks
• Two
repor*ng
levels
removed
• Required
staffing
secured
• Agile
process
Results
• Time
to
market
from
31
to
3
weeks
• Major
contribu*on
to
largest
deal
in
units
history
• Highest
employee
sa8sfac8on
within
Ericsson

23. Enhancer
Management team
Jan
Åke
Karlsson
Senior
Partner
Enhancer
Ulf
Lindberg
CEO
at
Enhancer
Consul*ng
• Ulf
is
a
business
and
marke*ng
oriented
CEO
with
a
strong
network
and
extensive
interna*onal
experience
from
strategy
development,
management,
nego*a*ons,
mergers
&
acquisi*ons
and
financing.
Ulf
has
15
years
experience
from
leading
posi*ons
in
large
global
corpora*ons
as
well
as
many
years
as
CEO
for
entrepreneurial
businesses.
• Ulf
has
with
Enhancer
worked
as
advisor
for
well
over
200
companies
on
request
of
owners,
boards
and
top
management,
from
big
mul*na*onal
corpora*ons
to
small
start-­‐ups
and
public
ins*tu*ons.
• Furthermore
Ulf
is
an
appreciated
moderator
and
process
leader.
He
is
for
example
moderator
for
CBN
and
in
Founders
Alliance.
• Jan-­‐Åke
has
a
business
and
marke*ng
background,
and
has
worked
in
a
variety
of
industries
and
corpora*ons
with
global
presence.
• During
his
career,
Jan-­‐Åke
has
primarily
been
engaged
in
change/growth
ini*a*ves,
e.g.
heading
complex
projects,
managing
turn
arounds
and
carrying
out
major
restructurings.
The
largest
organiza*on
he
has
led
had
a
turnover
of
2
billion
USD.
He
also
has
experience
from
working
with
brand
equity
issues
for
some
of
the
top
brands
of
the
world.
• Furthermore,
Jan-­‐Åke
has
been
Chairman
and
member
of
the
board
of
several
energy
companies,
entrepreneurial
start
ups
and
trade
associa*ons.

24. About AMG

25. Strategic Consulting in
Organizational Transformation
25 years of experience
advicing leading Firms in Latin
America.
We contribute to the
sustainable growth of
businesses by mobilizing
behavior and aligning
organizational
capabilities to the
company's
value
strategy.

26. Help companies
and people grow
and transform
themselves,
contributing to the
development of
those countries in
which they
perform.
Our Mission

27. Clients require us when…
Accelerated growth provokes
imbalances in their
implementation capacity
Lack of alignment with the
strategic vision hinders their
sense of direction
Mergers and acquisitions
require integration of
capabilities and cultures.
Mobilizing the organization’s
behavior is needed to increase
business performance.
Differentiating its value proposal
is required to create a client
centered organization.
New leadership practices need
to be developed to guarantee
sustainable growht

28. Pharma | Consumer
Our clients
Agribusiness

29. Financial ServicesUtilities | Energy | Industry
Our clients

30. ServicesTICs | Media Government
Our clients