Case Study - A deal team with a difference
Eric Machiels and Ying Tao from Terra Firma explain their involvement in PEF’s due diligence
Having been based in Southwark, one of London’s poorest boroughs, since late 2004, Terra Firma has long taken the view that institutions have a duty to support the communities that house them. Historically, we have donated a proportion of our profits last year it was 10% - to our Employees’ Charity Committee, which allocated this budget across a range of voluntary organisations in our local area.
PEF has offered us a unique opportunity to contribute our PE-skills to a local community charity in a new, highly participative way. This being the first year that Terra Firma has been able to participate in the PEF deal team process, we are yet to see the full evolution of a nominee charity. But the early signs are very encouraging.
We had the privilege to work closely together with a London-based community regeneration charity running a variety of highly innovative support schemes benefiting NEETs among others. Our input initially consisted in reviewing the PEF-orchestrated due diligence efforts. After attending one of their sessions with young people, we helped the charity’s team re-draft their business plan to more clearly articulate the unique differentiating features of their programme offering and potential impact thereof.
Throughout this process, we were genuinely won over by the passion with which the charity’s senior team and volunteers aim to turn their vision of community engagement into reality and to empower disadvantaged young people to reach their full potential. As we all know from dealing with portfolio businesses, a talented and fully engaged leadership team is a crucial stepping stone to success.
We were very encouraged by the degree of participation we have had in the process, and feel that this level of mutual engagement is reflected in the end result - a pitch for step-change funding to the board of PEF. Terra Firma tends to be very hands-on with its portfolio businesses, and we were very comfortable with taking the same approach here.
It has been extremely illuminating to see how charities are increasingly being run as professional businesses, whose aim is to maximise the utility derived from their funding by reaching the largest number of target audiences and achieving a lasting impact on the programme participants. There is a great focus on producing effective business plans, innovative marketing and generating returns skills which one might have traditionally associated more with industry or finance.
As this goes to press, ‘our’ charity is amongst a short list of organisations preparing to present their final proposals to PEF and we wish them the best of luck.
For our part, we’re very excited about our involvement with PEF and the opportunity to apply our skills and expertise in such a different context. We hope that this is the beginning of a much deeper working relationship.
