A Denison Client Case Study: Birch Hill Equity Partners

Overview: Birch Hill Equity Partners, a Toronto-based private equity firm, has invested in over 70 mid-market companies across Canada since 1994. Specializing in control investments valued between $100 million and $2 billion, Birch Hill focuses on driving operational growth rather than relying on heavy debt.

Challenge: Birch Hill needed a more effective way to assess and improve organizational culture across its portfolio companies, a critical factor in driving long-term success. Common situations included:

• Corporate carve-outs: For example, CCM Hockey, acquired from Adidas, required a complete cultural transformation to establish a strong independent identity.
• Founder transitions: Founder-led companies often lacked the cultural and operational infrastructure needed for significant scaling post-investment.

Traditional metrics and engagement surveys provided limited insight into cultural dynamics, which became increasingly important as Birch Hill undertook complex and high-growth scenarios.

Solution: Birch Hill implemented the Denison Model Assessment to gain deeper, actionable insights into organizational culture. This marked a shift from simplistic employee engagement metrics to a comprehensive culture scorecard, offering leading indicators of organizational performance.

Results:

• Enhanced Cultural Foundations: Tools like the Denison Model Assessment helped identify cultural gaps, enabling more strategic, precise actions during transformative moments such as leadership changes or post-acquisition integrations.
• Stronger Business Outcomes: In CCM Hockey’s case, the focus on culture helped build a new management team and create a robust brand identity, setting the stage for sustained growth.
• Portfolio-Wide Impact: Tailored cultural strategies for each company helped ensure alignment with long-term growth objectives, driving operational and financial performance.
• Valuation Advantage: Birch Hill’s focus on culture ensures that portfolio companies are more operationally robust and more attractive to buyers, enabling higher multiples at exit.

Key Takeaway: Birch Hill Equity Partners has demonstrated that investing in and measuring culture is essential for creating high-performing businesses. By incorporating culture as a key component of its investment strategy, Birch Hill ensures long-term value creation and enhances portfolio performance.