Churning or rolling?
There are probably many private equity executives who as teenagers wanted to follow in the footsteps of the Rolling Stones. Their wishes have seemingly come true as a recent Philip Delves Broughton article in the Financial Times shows the group to be role models for one of the more maligned practices of the private equity industry – secondary (and tertiary) buyouts, usually disparagingly described by its adversaries as “churning” or “pass the parcel”.
Philip’s article focuses on Keith Richards recent autobiography, Life, in which he describes the three very different managers of the Rolling Stones and the necessary roles that each played in the development of the group. The first manager got them into shape and off the ground (in a competitive market), the second took them international and into the big league whilst the last, Prince Rupert Lowenstein, ensured their staying power.
As a writer on management Philip suggests that such a model could be used for other industries. He is of course right and private equity executives have often argued that you need different managers with the relevant expertise and experience to help steer companies at various stages from early-stage, through growth and onwards to become world-leaders.
Even established private equity backed companies can require a change to their private equity owners’ skill sets and contacts to help them fulfill their potential – after all many other companies quoted or otherwise successfully change their management teams over the years whether by design or default.
Flicking through a list of Rolling Stones songs one can see that not only have they have become role models for a certain management style but also have provided some useful anthems. “You Gotta Move”, “Start Me Up”, “I’ve Been Loving You Too Long” or “Till The Next Goodbye” amongst others would be fitting tunes to have in the background at many a signing meeting.