News Bites. Just the Facts.

Bottom line, your EMPLOYEES are your strongest line of defense…or your weakest link.

Take Action

• A well educated work force is your best defense.
• Implement an interactive, ongoing security training program for employees.
• Form a rapid response plan for employees.
• Training platforms can usually be implanted in just a few weeks with very low startup and ongoing costs.

The Result

Implementation of an ongoing cyber security training program results in rapid and consistent decline in employee error:

High level questions to know before getting mired in details and deadlines

 

This may sound very basic, but it’s terribly important. As you’re considering an add on acquisition, the approach will differ somewhat as you determine the strategic intent of the add-on you are considering. We use the terms “Similar” and “Complementary.” The former is all about increasing ultimate exit values by securing an investment(s) that adds scale to your Portfolio Company’s existing business model. The latter is about adding exit value by acquiring a business in a related area.
To ensure you are getting what you think you’ll be paying for, the high-level questions to ask yourself are somewhat different. And, the answers may surprise you. This Soundbite, Part I, outlines the IT questions to ask related to transactions that are “Similar” in nature. Part II, “Complementary”, will appear in a subsequent Soundbite. Given our 14+ years of working exclusively with Private Equity Firms, we believe this two-part approach will provide practical information you can use to gain some early insight into the transaction.

The Questions

“Similar” add-on acquisitions are designed to offer the Private Equity investor the opportunity to add scale — revenues and profits — to your Portfolio Company’s existing business model. In other words, it’s all about cost-effective market share increase in an existing segment rather than expanding the segment per se. As example, when Proctor and Gamble decided to increase their share of the household detergent market they purchased and marketed Gain Detergent, a popular priced brand that did not compete on efficacy with their premium price leader Tide.
Consequently, we believe “Similar” IT diligences should concentrate on near-term operational efficiencies. Efficiencies that can be identified and targeted pre-acquisition. This process provides an important marker on how much you are paying for each million dollars of projected revenue increases. A few questions to consider:

1. Can economies-of-scale be created through changes in infrastructure (organization and plant)?
2. Are selected or merged purchasing efficiencies available?
3. Can we identify critical data needs versus unneeded/underutilized data collection?
4. Can we merge critical data centers to improve information flow and reduce costs?
5. Can processing power, networks, servers, and storage be consolidated by implementation of a best-of-best approach?
6. Can we reduce/eliminate duplicate applications by modifying/configuring/integrating existing software?
7. Can migrating to the cloud reduce infrastructure demands?

Word to the Wise

We recognize competition for good Portfolio Company deals is at a premium. But, the ultimate responsibility is to shareholders and stakeholders, so taking the time to understand technology in the beginning can prevent lots of post-acquisition headlines. Our suggestion, find a technology partner that can think both high-level operations and day-to-day IT needs. Better yet, feel free to give us a call to schedule time with one of our IT Specialists. There’s no cost, no obligation. Just another way of PIP saying thank you for your business and support.

Also, read Part II of this two-part series, “Eight Questions to Ask Before Closing a Complementary Add-On”

High level questions to know before getting mired in details and deadlines

 

A “Complementary” add-on involves growing a business by entering a related business area while targeting a different market segment. A good example would be Microsoft. Long noted for their Windows OS and Office Suite for non-early adapter tech users, they entered the teenage segment by adding the XBox and the Surface.
Consequently, the most impactful Complementary IT diligences concentrate on growing the business while looking for commonalities to either increase top line revenue or lower operating costs. As with a “Similar” add-on (see Part I), there are a series of questions to guide you in evaluating the likelihood of the acquisition helping you achieve your intended investment goals. A few questions to consider:

1. Can the business be rolled into a single, integrated business model?
2. Does the lead Portfolio Company have the resources (human and financial) to successfully implement the roll up strategy?
3. If not, what commonalities can be identified and rationalized?
4. Which systems and processes can be integrated immediately post acquisition?
5. What is the long-term integration plan? Does it match your intended exit strategy?
6. What is the potential for the creation of selected cross-group internal processes?
7. Are there any short and mid-term opportunities for shared services/platforms across the business units?
8. Are there any potential carry-over systems from the Add-On?

Word to the Wise

We recognize competition for good Portfolio Company deals is at a premium. But, the ultimate responsibility is to shareholders and stakeholders, so taking the time to understand technology in the beginning can prevent many post-acquisition issues. Our suggestion, find a technology solutions company that can think both high-level operations and day-to-day IT needs. Why not give us a call to schedule some time with one of our IT Specialists? There’s no cost, no obligation. Just another way of PIP saying thank you for your business and support.

Also, if you missed it, here’s Part I of this two-part series, “Seven Questions to Ask Before Making a Similar Add-On”

You’re quite familiar with the dialogue: “The more data we own, the better our metrics, the better fact-based decisions we can make.” But, are you confident your Portfolio Company can really find “the nuggets in the noise?”

A recent study by the respected International Data Corporation says most are not. According to the study, the average company uses less than 10% of the data they store and collect. Translation, most Portfolio Companies are “data-rich and insight-poor.”
It’s even possible, you as the Portfolio Company owner, may not realize your investment (s) have this challenge! So, based on our experience performing thousands of Portfolio Company engagements on behalf of our PE partners during the last decade, we offer THE five critical signs to watch for:

1. Portfolio Company managers spend too much time creating and analyzing Excel spreadsheets.

2. Different Portfolio Company departments make different decisions based on different sets of data.

3. Portfolio Company budgeting and forecasting appears complex and time-consuming.

4. Portfolio Company data analysis and reports are not created on a single platform.

5. Your Portfolio Company appears to possess marginal inter-departmental data collection.

The Good News? Your potential data conundrum is not fatal. An intelligent implementation of Business Intelligence can aggregate mountains of data and identify insights that will increase the EBITDA and Portfolio Company Exit Value of your industry-specific investment (s). And, designed properly, your BI solution can be surprisingly cost-effective and operationally non-disruptive.

If ANYTHING we’ve said rings a bell, give us a call or send us an email, we are always happy to help.

We have also developed an information-filled Business Intelligence workshop which offers practical tips and suggestions about what to look for, and how to find a solution to make data analysis more EBITDA focused. The 45-minute workshop can be delivered in person or remotely, and is also complimentary to PIP Private Equity clients.