The Analytics Advantage: Boosting Portfolio Company Value In Private Equity
The Analytics Advantage: Boosting Portfolio Company Value in Private Equity
In private equity, operational efficiency is vital—but that doesn’t mean it’s easy.
Even when operating partners have a clear strategy in mind, differences in port co size, culture, and capabilities can make it difficult to create a standardized reporting system, and those difficulties are only exacerbated when dealing with port cos across a range of industries.
Most smaller PE firms simply don’t have the staff or resources to give every single one of their port cos the time and attention needed to achieve their vision, even when they know exactly what they want from an analytics strategy. That leaves operating partners grappling with fragmented data, inconsistent reporting structures, and a lack of standardized insights, all of which hampers their potential for growth and profitability.
This is even more true when port cos are in older, less technical industries (such as HVAC, residential services, or healthcare), as is often the case with the PE firms we work with. These port cos don’t usually have a focus on data and analytics to begin with, so they lack the ability to get up to speed on analytics, either easily or quickly, even when presented with a clear plan.
Without a process in place to level up and standardize port co analytics capabilities, it is difficult, if not impossible, for PE firms to meaningfully compare metrics across their portfolio and make data-driven decisions. It is also an exercise in frustration for port cos that are already trying to adjust to a host of other changes that come with new ownership.
Fortunately, neither PE firms nor port cos have to do it all on their own. A qualified analytics consultancy can help operating partners level up the analytics capabilities of their port cos, enabling them to onboard new additions more effectively and giving them access to the consistent, accurate reporting necessary for bringing their vision to life. Port cos also benefit by being able to make smarter, faster, more strategic decisions with less time spent getting up to speed.
Case Study: Top Results across Different Industries
We recently worked with a PE firm whose portfolio companies varied widely in their ability to provide analytics reporting. Moreover, most of the port cos were in different industries, making standardization even trickier. The firm needed better visibility into metrics, specifically Operations, Finance, Sales, and HR. They wanted an automated process that would increase their portfolio companies’ analytics capabilities, providing consistency and trustworthy data across the entire portfolio.
We developed a program that could be deployed to every portfolio company in the firm, with the same look and feel for each. This process let the port cos know what to expect and gave the PE firm access to standardized data from all of them. Now this program is part of the PE company’s 100-day plan, bringing new port cos up to speed faster and more efficiently.
With this process, we were able to see results in specific port cos that included:
A business services company that had a wealth of information about its customers and processes but had not been able to use it effectively. Our program enabled them to harness its data, resulting in a 30% reduction in their time-to-deliver in just two months.
An engineering consultancy that had seen an increase in expenses. By creating analytics dashboards for every function within its business, we were able to help it quickly identify the cause of the increase in expenses, which allowed it to adjust and increase its EBITDA margin by 10%.
A storage & moving company was losing revenue to vendor expenses. Our analytics dashboards gave them visibility into the costs across vendors and enabled them to optimize their vendor selection process. Within 90 days, it was able to reduce the cost of serving clients by 35%.
Start Your Customized Analytics Plan Today
As an analytics consultancy, our role is to deliver on the strategy and value creation plan that operating partners have laid out. Our customized services, including data assessment, integration, visualization, and optimization, level up the analytics capabilities of port cos and give PE firms access to reliable, real-time data across their portfolio.
Bring your strategic vision to life. Reach out here to learn how we can create a customized program enabling you to implement your strategy across your portfolio.
