Overview
Private Equity firms (PE) are always looking for Value Creation opportunities, and their acquisition strategies are driven by data-driven analyses. During the deal process, PE firms rely on financial and operational data provided by a target company’s investment bank to build their investment thesis and later, their preliminary 100-Day Plan. However, upon deal close, the PE firm may struggle to replicate the investment bank’s analysis. Furthermore, the acquired company may not have any insight either – they just provided the raw data.
This can create a blind spot for the new owners. The lack of visibility and repeatability can introduce risks, delays, and additional costs in capturing value.
100 Day Plan
Given that the first 100 days are crucial in building trust and gaining momentum, there is a risk to the value creation process if data gaps and delays are present. The acquired company may not have the skills or resources to replicate the analyses done by the investment bank, and the PE firm often has to divert its own analysts away from other work to analyze financial and operational data, creating opportunity costs. Furthermore, inaccurate, or incomplete data provided by the target company can change the returns the PE firm thought were possible and can introduce delays and additional costs in the value creation process.
In short, there is an opportunity to quickly verify the data and assumptions that went into structuring the investment thesis and building and kicking-off a substantiated 100 Day Plan.
Approach
At ViTL, we understand the importance of accurate and complete data in creating a successful 100-day plan and in driving portco value. We work with PE firms prior to deal close, identifying specific financial and operational data that must be captured and agreeing on the analysis and reports required. Then we can start the data gathering and analysis process on day one of the acquisition, quickly validating the data provided prior to the deal and identifying opportunity areas based on the PE firm’s investment thesis.
Once we have a clear understanding of the 100-day plan focus and supporting initiatives, we develop a fit-for-purpose governance framework that ensures solid oversight of the work. We prioritize people change management to ensure that the relationships between the PE firm, the acquired company, and any outside help (including ViTL) are aligned to create successful outcomes. With all of this in place, the value created by each initiative can be tracked and reported on, which is key to successful Benefits Realization.
Benefits
ViTL’s approach to addressing the data blind spot provides several benefits to PE firms:
- 100-day plans are aligned with accurate and complete data, reducing the risk of changes to the investment thesis, and creating a clear path to value creation.
- Analysts time is freed up to focus on other work, reducing opportunity costs.
- The analysis is available to both the PE firm and the acquired company, creating transparency and reducing the risk of misunderstandings.
- A solid framework for governance and people change management ensures that all stakeholders are aligned to create successful outcomes.
- The value created by each initiative can be tracked and reported on, which is crucial to successful Benefits Realization.
In conclusion, ViTL’s approach reduces the risk of relying solely on investment bank data creating a blind spot for PE firms. Instead, it aligns the 100-day plan with accurate and complete data, frees up the PE firm’s analysts, provides transparency, and creates a framework for governance and people change management. By tracking and reporting on the benefits or value created by each initiative, ViTL’s approach provides a path to successful Benefits Realization, ensuring that the acquired company can successfully integrate and drive value from day one.A solid framework for governance and people change management ensures that all stakeholders are aligned to create successful outcomes
