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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