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A diligent approach to value creation

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As a private equity professional, this scenario may be all too familiar. You acquire a company with tremendous potential for organic and add-on acquisition growth. The confidential information memorandum presents an attractive investment thesis and the financials are sound. But the headwinds of institutional muscle memory, legacy technology and the desire to maintain the status quo are much greater than expected, slowing down the change that’s critical to your strategy and exit timeline. 

The best way to focus your thoughts and investments on creating value is to use a growth framework to address what matters most to the investment thesis, and help you to be more deliberate about the actions you will and just as crucially, won’t take.

The deal process should include full operational due diligence and rough order of magnitude (ROM) sizing. Using a comprehensive and repeatable framework for operational due diligence will assist in assessing all aspects of the business and their value levers. A value creation framework will allow you to be more deliberate in considering critical parts of the business, and to develop and coordinate a comprehensive 100-day plan that focuses less on the 100 days and more on those areas that drive specific value in line with your exit strategy.

Published in PEI’s Operational Excellence Special, read more about our value creation framework which outlines the 11 areas of the business, both front and back-office, that are critical to unlocking an acquisition’s full value.

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