Blackstone Taps Quella To Monitor Its Portfolio

Acknowledging the changing realities of dealmaking in the private equity arena, Blackstone Group recently named James Quella as a senior managing director with responsibility for monitoring the strategy and enhancing the performance of the firm’s portfolio companies. Quella joins Blackstone from DLJ Merchant Banking Partners, a division of CSFB Private Equity, where he was a managing director and senior operating partner. Previously, he was a vice chairman of Mercer Consulting Group, where he spent 20-plus years honing his management skills. “With the dramatic growth in both the number and size of our private equity portfolio companies, it was becoming increasingly important to formalize our process of monitoring both the strategy and performance of these entities,” stated Stephen Schwarzman, Blackstone President and CEO, as Quella assumed his new position. Quella says he will shoulder the responsibility of enhancing the performance of firm’s portfolio companies for as long as Blackstone controls them. His appointment emphasizes buyout groups’ shift in focus – from sitting on portfolio companies and planning exits to pursuing value enhancements and performance improvements. “We’re seeing private equity firms becoming more like industrial holding companies,” he notes. In helping to improve the businesses, the veteran consultant says he will have the delicate task of facilitating the transfer of knowledge to the management teams without undermining their authority. In the current environment, which is more volatile than in the boom years of the 1990s, owners have to adjust to having less leverage in their companies, Quella notes. “With multiples no longer expanding – and in some cases contracting – you no longer have a rising tide lifting all boats.” And with choppier markets, he suggests that rather than merely employing financial engineering techniques or owning companies until flipping them, there is an increased need for operational skills. In his new job Quella will provide guidance and support for senior management in order to facilitate efficiencies at Blackstone’s portfolio companies. In this oversight role, he will draw on the numerous consulting assignments he performed throughout his career, which he said have given him experience in nearly every industry and have exposed him to a wide range of problems and resolutions. Having implemented such solutions as wringing out costs, outsourcing functions, dropping unprofitable customers, and raising prices, Quella believes he’s ready to assist the firm in making decent investments into exceptional ones. And since Blackstone doesn’t segregate the functions of pre-purchase and post-purchase analysis of companies, he will assist the firm’s personnel engaged in evaluating assets as potential acquisition candidates as well as perform his primary performance-monitoring function on existing Blackstone properties. Copyright 2004 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.majournal.com