Working with portfolio companies
In the early stage of partnership, immediately after the acquisition closing process, we like to engage in a focused planning exercise which leads to a broad consensus regarding the company's strategic plan with clearly understood objectives and milestones.
Post-acquisition activities often involve extensive interaction with each portfolio company and its management. Our involvement typically includes regular communication with management (e.g., monthly reviews, quarterly board meetings, and annual budgeting sessions), participation in strategic planning sessions, and frequent, informal meetings and conversations. In addition, we render assistance to portfolio companies on a project or functional basis as circumstances warrant.
For example, we regularly guide and assist management teams confronting strategic acquisitions for their companies. From the outset of an investment, we encourage a team to engage in a regular strategic planning process and to think broadly about acquisitions that complement the company's competitive strengths. Mindful of the complexity of integrating operations effectively, Berkshire helps develop thorough integration plans with milestones, timelines and responsibilities clearly articulated.
Other examples of value-added activities include assessing management needs and assisting with the recruitment of important additions to the management team, improving retention of key talent, managing the lender group to assure the company of financial flexibility, guiding effective compensation policies throughout the portfolio company, and generally ensuring sound corporate governance.
Berkshire also assists companies in addressing strategic issues through the creation and use of an effective board of directors. Berkshire generally augments these portfolio company boards by working with management to identify and recruit outside directors with relevant experience from industry contacts known to managment of Berkshire's broad network of contacts.
Lastly, we have built a community of operating executives across our companies who can serve as sounding boards and resources to each other. Our executive conferences and other resources build and reinforce this special community. We continue to make major investments in these resources because we are convinced that they help our management teams compete and succeed.