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Punit is a technology innovator and vice president at Persistent Systems. He shares his views about how private equity organizations can identify and accelerate value creation levers within their portfolio company ecosystems.
Q: Where does Persistent Systems add value in the lifecycle of enterprise software assets, in the context of private equity acquisitions?
Persistent Systems has different kinds of offerings for different stages of the investment lifecycle of enterprise software assets:
- Supporting due diligence before acquisition: Generally, PE firms conduct their own due diligence ahead of any potential enterprise software acquisitions. Persistent is brought in only for very specific cases such as product due diligence. Let’s take an example of a portfolio company. It had a mix of legacy and modern products with a roadmap to move into the cloud. Persistent analyzed the codebase of the product, looked at the technical debt, the areas of optimization and checked employee engagement with version control repositories (the check-ins) to identify the priority employees to retain, and identified hotspots for where the maximum leakage of code was happening. Persistent then reported back to the PE firm on the necessary investments to be made for modernization.
- Evaluating assets for outsourcing after acquisition: Persistent inspects the assets, product backlog and geographical spread to identify areas appropriate for outsourcing.
- Optimization and growth, during holding period:
- Product Acceleration – Assist in moving products to the cloud and other newer technologies, assess the product roadmap to suggest the fastest way to achieve this.
- Scale – Identify areas such as nearshoring, offshoring, or onshoring to achieve scale.
- Optimization – Identify the areas with the strongest technical staff and help in optimizing it. Also identify if the correct expertise is in place and whether there is any requirement to bring staff from other geographies to onshore locations.
- At Exit – If a portfolio company goes public or gets acquired by another PE firm, Persistent works with the new PE firm in supporting continuation of the obligations of the previous contract.
Q: How is Persistent equipped to address Private Equity firm’s needs?
With 30 years of software product engineering experience, Persistent brings together the right expertise, operating models, and infrastructure required to help PE firms derive value throughout the investment lifecycle in software companies.
- We think like a PE firm, as most of Persistent’s leadership team have come from PE space and have a clear understanding of the PE mindset, with the agility and flexibility needed to achieve portfolio companies’ objectives.
- A PE-focused business unit that includes capabilities to scale engineering and digital transformation initiatives for multiple portfolio companies, while offering governance and reporting at the PE level.
- PE-focused global technology centers equipped with technical and operational leadership for managing talent using a framework called Advance Available For Deployment (AAFD). Persistent also established Persistent University that gives technical certifications and domain training to the teams to build acumen and culture alignment, starting from day one.
Q: What type of engagement models do you leverage with portfolio companies at the PE level?
Persistent engages with PE firms through various flexible models, such as:
- Globalization: Persistent runs the engineering and operations of portfolio companies efficiently by optimizing talent, location, and processes. Portfolio companies come to Persistent with objectives such as i) Product Acceleration and Modernization, ii) Sustenance Engineering, iii) Digitizing their product portfolio with Salesforce, Cloud, data and security.
- Captive Carve-outs: Persistent takes over the entire engineering centers, including real estate, infrastructure and assets and rebadges employees. We then offer them back with the same or better SLAs at better costs. It has been noted that Persistent offers capabilities better than the product companies it had worked for and excels at managing technical skills and outcomes. That’s why we are known as a product engineering company.
- Joint Ventures: In select cases, when co-investing makes sense, Persistent invests in the development, sustenance, and modernization of a product or platform while the portfolio company focuses on go-to-market strategy. This type of engagement model typically includes revenue share, equity, or royalties.
Q: When Persistent is co-investing or co-building a product with a portfolio company, how does it maintain predictability and transparency?
Persistent does this by driving governance at multiple levels and is guided by the structure of the PE firm and its portfolio companies.
- At Project level (Level 1) – delivery governance between the portfolio company and Persistent’s delivery organization, making sure that the product roadmap is achieved within budget, on time and in scope.
- At Company level (Level 2) – governance with the CXO office to drive the relationship at the portfolio company level. The PE-focused business unit that drives overall execution and governance leadership helps maintain this governance.
- At PE level (Level 3) – with the Operating Partner. The amount of impact Persistent is driving across all the portfolio companies is measured at this level. The operating partner gets the view of the entire portfolio from Persistent’s single dashboard – which shows the amount of savings achieved and the progress in product acceleration.
Q: How are you leveraging the global presence of Persistent to support customers?
This enables us to deliver services from any location as per the preference of the portfolio company or PE firm, be it onshore, nearshore, or offshore. Among offshore locations, India is seeing an interesting change with the rise of tier two cities. Software company CTOs are avoiding the traditional talent hotspots such as Bangalore as technical talent is getting unavailable. Persistent has a strong presence in two tier two cities, Nagpur and Goa – nearly 2000 technologists in Nagpur and 800 in Goa. This is in addition to a big R&D presence in Pune, where we are headquartered.
Outside India, Persistent has large delivery centers in the US, Central and Eastern Europe, and in APAC – Asia and ANZ. Nearshoring has gained popularity as people prefer working in similar time zone and in the vicinity of the headquarters or the development centers. To meet this requirement Persistent is leveraging nearshore centers (in Mexico, Canada, and Eastern Europe) to offer nearshore services.
Q: How does Persistent go about co-innovation with portfolio companies to build a product?
Among the various investments made by Persistent in co-innovation, one of them is hackathons. Every year, Persistent holds India’s largest Hackathon event which helps in developing innovative processes for product acceleration, market adoption and customer satisfaction.
Persistent has also developed strong relationships with investment banks, transaction advisors, restructuring advisors and others in the PE ecosystem. For most of the PE relationships, Persistent leverages this ecosystem to exchange ideas and build working relationships.
Persistent’s CTO organization also works with the CTO and product teams of the PE firms to help with their innovation initiatives. For many customers, we’ve helped build, draft and file patents on their behalf. At the PE’s Global Technology Center, we run multiple innovation workshops that generate transformation ideas, which subsequently gets embedded in their product roadmap.
Q: How is Persistent hiring and retaining talent?
Persistent is a renowned technology brand in India which helps attract tech talent. In the last two quarters alone, Persistent has added nearly 4,000 new employees and hires directly from the top tier Indian Universities and educational institutions.
Persistent is consideredthe best place to work, among its competitors with one of the best employee engagement programs which helps retain talent. This includes volunteering, ESG and diversity and inclusion initiatives. In Persistent, every employee has complete visibility to their career growth and gets opportunities of continuous learning and certification from Persistent University.
Persistent brings together the right expertise, operating models, and infrastructure required to help PE firms derive value throughout the investment lifecycle in software companies. Learn more about how Persistent can help you drive transformational value within your portfolio companies by visiting our Private Equity offerings page.