Posts tagged: private equity

Rekha Agrawal, CEO of KiddeFenwal, outlines how private equity involvement shapes operational practice for sector leaders and highlights regulated governance considerations for organisations navigating ownership shifts

For a number of years, private equity has shown growing interest in the fire prevention industry.

They first invested in the installation and services side of the business, where their involvement provoked some consolidation of the space through merger activity, and have since expanded their dealmaking to include more product-focused companies.

This enthusiasm on the part of private equity reflects the strength of the fire industry, the attractiveness of recurring revenue, the stability of a highly regulated sector and – crucially – opportunities to add value to organizations that play an essential role in the safety space, where what we do matters in protecting lives and assets.

Given people’s natural resistance to change, this trend has created some concerns in the global fire space.

Negative headlines can generate anxiety tied to private equity ownership, if not by business owners benefitting from the deal than by those outside executive level roles.

Such anxiety may lead to lower company morale and employee wellbeing, disincentivizing team members and distracting them from their most important tasks and goals.

I would argue that, as is often the case, these fears are based on a broad stereotype of the private equity world.

While pundits tend to paint it with an exceedingly broad brush, the sector is incredibly diverse, made up of firms of all sizes and focus areas.

The vast majority of these consist of good faith actors who have a mandate of adding value to their portfolio – their primary means of benefiting their employers and limited partners, the latter which can often be constituted from a mix of organizations like pension funds and foundation endowments.

Fire professionals would benefit from internalizing this alternate perspective on private equity, and understanding the vast benefits that can come with their backing.

For example:

Added capital

Given their perspective of wanting to add value to the businesses they acquire, private equity is not necessarily shy about deploying capital in these businesses where they see a strong case for a return on their investment.

This allows fire businesses with this ownership to play offense in today’s era of nonstop disruption.

Capital deployment can help businesses in our industry continue to innovate to meet customers’ evolving needs.

Improved structure

Importantly, private equity investors do more than deploy capital.

They also provide valuable guidance on business operations, earned through their experience with other companies they’ve held in their portfolios and also often through individual operator backgrounds.

This perspective can bring best practices to companies on internal processes, as well as thoughts on state of the art tools and strategic approaches.

From sales to payroll to HR and many other important business functions, they can help formalize and streamline processes to enable organizations’ rapid scale.

Better customer support

A key area of focus for every business leader is being responsive to customer needs.

Often, internal barriers make this difficult – be it through clunky systems, bureaucratic processes such as multiple levels of internal approvals, or other time consuming but low-value-add tasks.

Private equity naturally brings with them a view of business that biases toward speed, and can help bring a fresh perspective in reducing these barriers.

Greater agility

In fact, private equity is historically much more focused on agility than corporate-owned enterprises are.

They tend to foster more entrepreneurial cultures that reward change readiness, decisive decision making and calculated risks.

As a result, their portfolio companies tend to have less bureaucracy that can stymie innovation and hinder progress.

This empowers individuals to make an impact within their organizations and rewards their hard work and dedication.

Of course, private equity firms bring with them a certain level of expectations.

Backers look to ensure focus and high performance among individuals and can be impatient when outcomes are disappointing.

While this drive can be intimidating initially, it creates an atmosphere of alignment – everyone is striving for the same goal, accountable to each other and succeeding together.

It is true that some private equity firms do focus purely on the bottom line and therefore cost control above all else, a mentality that gave rise to prevailing negative stereotypes.

This may raise alarm bells among team members of companies being acquired.

I’ve lived both experiences and I’ve learned firsthand the force multiplier impact that can come from the successful partnership of these entities.

To illustrate, I took on the role of CEO of global fire suppression and safety controls leader KiddeFenwal in November 2024, four months after it was acquired by Pacific Avenue Capital Partners.

Since then, the company has streamlined operations for speed; invested heavily in a new class of environmentally responsible technologies; and partnered with significant players in the data center space for comprehensive fire solutions.

We’ve experienced double-digit growth and grown headcount more than 20% globally in the last year.

I have had team members from the factory floor to the executive suite tell me that they are truly energized by what we are accomplishing.

Fear is a normal human reaction to change, and more so when it relates to people’s livelihoods.

This makes it increasingly important for those of us in the fire industry to objectively understand and clearly communicate the potential benefits that come from collaboration with the private equity world.

About the author

Rekha Agrawal is CEO of KiddeFenwal.

She has extensive experience in fire suppression and industrial systems, previously leading multibillion-dollar product and service portfolios at Tyco and Johnson Controls and managing global teams across engineering, supply chain, sales and product management.

She also served as an Operating Partner at Morgan Stanley Infrastructure Partners.

She holds a PhD in statistics from the University of Waterloo and engineering degrees from Queen’s University in Canada.