In this episode of The Private Equity Podcast, Alex Rawlings speaks with Russ Roenick, Co-Founder and Managing Partner at Transom Capital, about building a differentiated middle-market investment strategy around carve-outs, special situations and operational complexity.

Russ explains how launching Transom shortly before the global financial crisis shaped the firm’s highly hands-on approach. He outlines how Transom identifies businesses with strong underlying industry potential but significant operational challenges, then applies a disciplined value-creation model to improve performance.

The discussion covers Transom’s six core operational transformations: salesforce effectiveness, new product innovation, digital transformation, supply-chain improvement, cost reduction, and talent and culture.

Russ also shares how the firm structures its operations team, why former portfolio-company CEOs and CFOs can become highly effective operating partners, and how Transom is deploying AI across back-office and commercial functions.

Key Takeaways

Why operational and situational complexity can create attractive entry points.
How Transom approaches carve-outs as an opportunity rather than simply additional risk.
The importance of building repeatable operational capabilities instead of attempting every possible transformation.
Why operating teams should be involved from underwriting through execution.
How supply-chain improvements have generated substantial gross-margin expansion.
Where AI is currently delivering value across accounts payable, receivables, customer service, forecasting and sales.
Why portfolio companies need internal AI champions to drive adoption.
How leaders can stay informed without overpowering portfolio-company management teams.

Timestamps

00:00 Introduction to Russ Roenick and Transom Capital
00:30 Moving from McKinsey into Private Equity
01:26 Transom’s value-oriented investment strategy
01:55 Distressed investing versus operational value investing
03:16 Using operational and situational complexity
04:14 Carve-outs, lender situations and tail-end funds
05:14 Launching Transom during the global financial crisis
07:04 The importance of adapting while maintaining investment discipline
08:29 Why Transom specialised in carve-outs and special situations
10:58 Why many firms view carve-outs as excessive risk
12:54 Transom’s six operational transformation strategies
13:23 Salesforce transformation
14:17 New product innovation
14:45 Digital transformation and AI implementation
15:15 Supply-chain and gross-margin improvement
16:13 Cost reduction, talent and culture
17:37 Structuring the portfolio operations team
18:05 Recruiting former portfolio-company CEOs and CFOs
19:59 Transom’s approach to AI adoption
20:57 Applying AI across back-office functions
21:49 Creating internal AI champions
22:48 Common AI use cases across the portfolio
24:10 How Russ stays informed
25:31 Leadership, decision-making and knowing when to step back
25:57 How to contact Russ

Raw Selection partners with Private Equity firms and their portfolio companies to secure exceptional executive talent. We focus on de-risking executive recruitment through meticulous search and selection processes, ensuring top-tier performance and long-term success.

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