Stern Partners’ data journey has its companies primed for decades of success
Stern Partners is very deliberate about the investments it makes. Moves are always made strategically, with long-term goals in mind. Impressing investors with the latest quarterly report is not in the DNA. In fact, there is no external investment, it’s all in-house capital. Stern Partners does its homework when acquiring companies, making sure the business is within its wheelhouse and has a solid foundation. In short, the firm doesn’t undertake new ventures lightly. So, when BOSS spoke with vice president of technology Peter Roberts about the data-driven journey Stern Partners is on, we knew the firm had done its due diligence to secure prosperity for the companies it owns. Roberts gave us a look inside that journey.
Do More with Data
Whether the business is in manufacturing, distribution, retail, publishing/media, or services, there are certain commonalities. From a technology perspective, most important is that data is their most essential and valuable asset.
“It’s the thing that helps a business optimize current operations as well as driving growth,” Roberts said. “So the questions we ask are, ‘How can I leverage the data that I have? Do I need to bring in an application or platform to capture or generate data that I don’t have? How can I use that data more effectively?’”
From that starting point, Stern and the principals in the 22 Stern Partners-held companies are able to identify synergies and work more closely to the benefit of all.
Storing all that data on the cloud is “not a convenience, it’s an essential,” Roberts said. Not only does it simplify data storage immensely, it’s the first step toward cybersecurity resiliency. The ability to protect and recover data from the cloud is much greater than with in-house infrastructure, with the bonus of not having to build and support complex technology yourself.
Operating from those principles, Stern Partners has guided its companies to a cohesive tech strategy. Thanks to a mutual trust, they’re able to change as times demand without anyone getting lost in the shuffle. Roberts is in regular communication with the presidents and CEOs of each company to explain the rationale behind a tech strategy and implementation.
“There’s always a human desire to have agency and have control. That’s totally natural,” he said. “As we continually educate ourselves on the advantages of doing things in a collaborative manner, the benefits are inescapable. It minimizes our cost, it gets them to market sooner, and levels the playing field across the portfolio.”
A prime example of this rising tide lifting all boats is among Stern Partners’ retail companies. There are six full-fledged retail companies and one combination retailer-wholesaler, making the sector the most-represented one in the investment portfolio.
In 2017, Stern Partners set about gathering information from the retailers, sorting through it to identify potential areas of collaboration. They invited the IT and digital teams from each company to a series of summits over the course of 18 to 24 months to build a consensus on a digital tech strategy.
“The first thing we did was consolidate them on the same e-commerce platform,” Roberts said. “There are a lot of benefits to that. We get a lot more value out of the licenses and subscriptions when buying one product from one vendor. There’s also the ability to grow resources and skills around a common platform.”
They did the same with a marketing technology platform, consolidating from three or four platforms to one, again maximizing value. With everyone on the same platforms, the data synergies quickly revealed themselves.
With that in place, Stern Partners was able to take the next step, creating a shared services company. Its initial purpose was logistics and fulfillment for fashion retail. It’s now expanded to include IT, digital marketing, e-commerce, and finance for all the retailers.
“That’s been the most strategic change in terms of how Stern has operated in working with the companies in its existence. That was a very significant departure. Rather than them all operating organically and independently, we brought a group together and have driven a lot of value by putting these shared initiatives in place, and it was underpinned if not driven by technology.”
Circle of Trust
As in everything else, Stern Partners keeps a close inner circle of key vendors and partners for its tech operations.
“I believe in using consulting and expertise at the beginning of journeys, that’s when you get the most value out of it,” Roberts said.
Telus Communications came in to support cybersecurity maturity and vulnerability assessments, helping Stern develop a security-related technology roadmap. Telus is now a trusted telecom, network services, and cybersecurity vulnerability partner. Salesforce provides software solutions primarily in the retail, media, and wholesale distribution spaces. Microsoft supplies support to each company in Stern’s portfolio. PricewaterhouseCoopers helps on the services side with everything from auditing to data science. Hitachi helps with digital transformation, primarily on the ERP side.
OSF performs digital integration.
“They do all of the work for our companies on the Salesforce platform,” he said. “They’ve been a great partner. They do support, they do projects, they’re really outstanding.”
The trust and value these close relationships bring allow Stern and each company in its portfolio to get the most out of their investments.
“If I look at us operating 22 companies, there are probably three or four that are of substantive size that they could negotiate a pretty good enterprise deal on their own,” Roberts said, “but there are 17 or 18 other companies that couldn’t. When you bring them all together, now all of a sudden it’s a very large enterprise.”
Things can move fast in business. Acquisitions can occur with an exit strategy already in place. Stern Partners takes a more sustainable approach, understanding that growth is a natural product of well-run businesses. The data journey has Stern ready for a new era, and you can be sure it’s in it for the long haul.
Founded approximately 30 years ago by Ronald N. Stern, Stern Partners is based in Vancouver, Canada, with the head offices of our independently managed operating businesses located primarily throughout North America. Stern Partners is a lead investor in a diverse range of operating companies. Currently we own 20-plus companies which are operated and managed independently, generating total revenues of over $1.75 billion and collectively employing 7,000 people. We have built a reputation as a committed long-term investor dedicated to growth and value creation. We do not generally make investments for a predetermined term or based on a fixed liquidity target. Rather, our focus is on the quality of the business and its management – not the exit strategy.
As every business is unique, our investments are tailored to the particular needs and circumstances of each situation. Our approach is flexible to ensure that our companies have the management and resources necessary for each phase of their growth. Our objective is to create a relationship and financial environment in which each company can optimize its development and value.
We primarily seek out the following types of investment opportunities:
Sale or Recapitalization by Owners-Founders
Divestment and Spin-Offs
Capital Injection for Expansion Turn-Around Situations