How PE Firms Can Leverage Analytics for More Successful Exits
A port co’s analytics capabilities can increase its operational efficiencies during the holding period, but analytics can also provide enormous advantages before, during, and after an exit. Sound analytics help establish your port co’s value, make due diligence run more smoothly, and enhance your PE firm’s reputation as a company that provides high-quality assets.
A More Competitive Port Co
Accurate and timely operational metrics are a critical component of value creation. An analytics infrastructure, established during your holding period, enables your port co to run like a well-oiled machine. By the time you are contemplating an exit, your analytics reporting will have helped decrease inefficiencies and optimize performance, making your port co a more valuable acquisition.
Analytics also add value by making life easier for the buyer. By saving them the trouble of putting an analytics program in place themselves and offering a smoother transition over the first 100-day period, it allows the acquiring firm to get its new company up to speed quickly, saving time, money, and frustration in the process—all of which add up to your port co being a more attractive investment.
More Efficient Due Diligence
After executing an LOI and entering exclusivity, any delays at this stage can set deals back or even prevent them from materializing, so transparency and communication are vital during this process. The sheer volume of information needed, however, can be overwhelming.
As operating partners well know, the more accessible and better organized your data is, the better the chance of a successful outcome. A reliable analytics program puts the necessary information at your fingertips, helping to accelerate the due diligence process by reducing the time it takes to analyze and process information. Financial analytics, operational metrics, and executive dashboards allow operators to dig into the details that buyers are most interested in and deliver them in a timely manner. Ultimately, this efficiency helps protect against re-trades and may contribute to a better outcome.
An Enhanced Reputation
Incorporating robust analytics capabilities goes beyond being a best practice. It’s also a testament to quality and transactional success, helping position your firm as a preferred, trustworthy player.
PE firms whose portfolio companies are supported by a sound analytics infrastructure communicate reliability and quality, creating a reputation for facilitating high-quality sales and seamless collaborations. This, in turn, can streamline future transactions.
Case Studies: Easier Due Diligence and Increased Valuation
As one example, we can point to a portfolio company in the business services sector which we set up analytics infrastructure for. When it was time for an exit, the acquirer was impressed with how well-structured the company was and how well it was managing itself with a data-driven focus. As due diligence came up, we were brought in to support the port co in answering key questions by leveraging the data that we had produced for it. As a result, the company was able to provide detailed information about its customer cohort analysis, overall marketing spend, customer acquisition costs, and its costs for servicing clients, greatly enhancing the efficiency of the due diligence process.
In another case, we created an analytics platform for an EdTech company, allowing them to dig deeply into valuable information during the due diligence process. They were able to present data on the operational improvements that had been made, the regional marketing shifts that had been monitored, and the increase in long-term customer value. All of this data contributed to an increase in the value of the business of 20% from LOI.
Future-Proofing Your Exit
For PE firms eyeing successful exits, robust analytics capabilities can make the process smoother, faster, and in some cases, more lucrative. Not only does a strong analytics infrastructure increase the value of your portfolio company, but it also simplifies the transaction process for the buyer, making it a more competitive asset all the way around.
Analytics can help at any stage of a business cycle, but the sooner they’re installed, the sooner port cos and operating partners can begin benefitting from them. At NuView, we help our clients level up by providing services such as data assessment, integration, visualization, and optimization. Reach out to learn how we can create a customized program that will support both your individual companies and your broader strategy.
