Written by the Hermes Management investment team.
Force is what a spreadsheet does to a business: more debt, faster cost cuts, a shorter hold, an exit priced on a multiple someone else has to believe in. It works when markets are liquid, credit is cheap and buyers are queueing. It fails badly everywhere else – and most of the economies we underwrite are everywhere else.
Power is slower and duller. It is a second production line financed at the right moment. It is a founder-run company acquiring the compliance function it never built. It is replacing a distributor with a direct sales team so margin stops leaking. None of it makes a headline; all of it survives a repricing.
The discipline that makes this possible is refusing to underwrite an exit you cannot describe today. If the only route out is a strategic buyer who does not yet exist, the position is a bet on sentiment. If the business throws off cash you would happily keep receiving for a decade, the exit becomes an option rather than a requirement.
This is also why we invest our own capital alongside our clients'. Alignment is not a slide in a pitch deck; it is what stops a manager from choosing the loud decision over the correct one when a quarter turns ugly.